The Balance Sheet of Mini Company Was as Follows Immediately

question 29

Multiple Choice

The balance sheet of Mini Company was as follows immediately before it was acquired by Maxi Company:

$\begin{array}{l}\begin{array} { l } \text { Cash } &&&&&& \$ 90,000 \\\text { Accounts receivable (net) }&&&&&&50,000 \\\text { Inventory } &&&&&&150,000 \\\text { Plant and equipment (net) } &&&&&&100,000 \\\text { Total Assets } &&&&&&\$ 390,000\end{array}\\\begin{array} { l } \text { Accounts payable } & \$ 40,000 \\\text { Notes payable } & 80,000 \\\text { Common stock } & 155,000 \\\text { Retained earnings } & 115,000 \\\text { Total Liabilities and Stockholders' Equity } & \$ 390,000\end{array}\end{array}$
On January 1,2010,Maxi Company paid $350,000 in cash for 100% of the outstanding common stock of Mini Company.The current market value of Mini Company's plant and equipment was $140,000 on the date of acquisition.If the market value and book value are the same for Mini's remaining assets,what is the net increase in Maxi's assets as a result of the merger with Mini?

• A)$430,000
• B)$470,000
• C)$120,000
• D)$390,000

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Definitions:

Void

Describes a contract or legal agreement that lacks validity and enforceability from the outset.

Economic Duress

Coercion involving threats to a person’s business or financial condition that compel the person to act against their will in entering a contract.

Voluntary Choice

The concept of making decisions freely, without coercion, often discussed in contexts of contract law and ethics.

Legitimate Alternatives

Viable and lawful options or solutions that are considered acceptable within a given context or situation.