Parent Inc Assuming That Parent Inc Acquires 80% of Sub Inc on on July

question 36

Multiple Choice

Parent Inc. and Sub Inc. had the following balance sheets on July 31, 2019: $\begin{array}{|l|r|r|r|}\hline & \text { Parent Inc } & \text { Sub Inc } & \text { Sub Inc } \\\hline & \text { (caryying value) } & \begin{array}{r}\text { (carrying } \\\text { value) }\end{array} & \text { (fair value) } \\\hline \text { Cash } & \$ 180,000 & \$ 36,000 & \$ 36,000 \\\hline \text { Accounts Receivable } & \$ 100,000 & \$ 40,000 & \$ 40,000 \\\hline \text { Inventory } & \$ 60,000 & \$ 24,000 & \$ 27,000 \\\hline \text { Plant and Equipment (net) } & \$ 200,000 & \$ 80,000 & \$ 93,000 \\\hline \text { Goodwill } & \$- & \$ 8,000 & \\\hline \text { Trademark } & \$- & \$ 12,000 & \$ 15,000 \\\hline \text { Total Assets } & \$ \mathbf{5 4 0 , 0 0 0} & \$ 200,000 & \\\hline \text { Current Liabilities } & \$ 80,000 & \$ 50,000 & \$ 50,000 \\\hline \text { Bonds Payable } & \$ 320,000 & \$ 20,000 & \$ 24,000 \\\hline \text { Common Shares } & \$ 90,000 & \$ 80,000 \\\hline \text { Retained Earnings } & \$ 50,000 & \$ 50,000 \\\hline \text { Total Liabilities and Equity } & \$ 540,000 & \$ 200,000 \\\hline\end{array}$ Assuming that Parent Inc acquires 80% of Sub Inc on August 1, 2019 for cash of $180,000, the Shareholders' Equity section of Parent's consolidated balance sheet on the date of acquisition would total to what amount if the identifiable net assets (INA) method were used?

• A) $140,000
• B) $185,000
• C) $270,000
• D) $167,400

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Definitions:

Double Forecasting Model

A predictive analysis technique that incorporates two different forecasting methods to improve accuracy or to provide a range of possible outcomes.

Level

The magnitude or position on a scale, often used to describe the intensity or degree of a certain variable in data analysis.

Trend

A general direction in which something is developing or changing, often identified through analysis of data over time.

Double Forecasting Model

A predictive analysis technique that utilizes two different forecasting methods to improve the accuracy of future predictions.