Following Are Selected Accounts for Green Corporation and Vega Company

question 89

Multiple Choice

Following are selected accounts for Green Corporation and Vega Company as of December 31, 2015. Several of Green's accounts have been omitted. $$\begin{array} { l r r } & \text { Green } &{ \text { Vega } } \\\text { Revenues } & \$ 900,000 & \$ 500,000 \\\text { Cost of goods sold } & 360,000 & 200,000 \\\text { Depreciation expense } & 140,000 & 40,000 \\\text { Other expenses } & 100,000 & 60,000 \\\text { Equity in Vega's income } & ? & \\\text { Retained earnings, 1/1/15 } & 1,350,000 & 1,200,000 \\\text { Dividends } & 195,000 & 80,000 \\\text { Current assets } & 300,000 & 1,380,000 \\\text { Land } & 450,000 & 180,000 \\\text { Building (net) } & 750,000 & 280,000 \\\text { Equipment (net) } & 300,000 & 500,000 \\\text { Liabilities } & 600,000 & 620,000 \\\text { Common stock } & 450,000 & 80,000 \\\text { Additional paid-in capital } & 75,000 & 320,000\end{array}$$ Green acquired 100% of Vega on January 1, 2011, by issuing 10,500 shares of its $10 par value common stock with a fair value of $95 per share. On January 1, 2011, Vega's land was undervalued by $40,000, its buildings were overvalued by $30,000, and equipment was undervalued by $80,000. The buildings have a 20-year life and the equipment has a 10-year life. $50,000 was attributed to an unrecorded trademark with a 16-year remaining life. There was no goodwill associated with this investment. Compute the December 31, 2015, consolidated buildings.

• A)$1,037,500.
• B)$1,007,500.
• C)$1,000,000.
• D)$1,022,500.
• E)$1,012,500.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Bank Charges Expense

Costs incurred by an account holder for the bank's services, such as account maintenance fees, non-sufficient funds (NSF) fees, or transaction fees.

NSF

An abbreviation for "Non-Sufficient Funds," indicating that a cheque could not be honored due to insufficient funds in the account.