On January 1, 2013, the Moody Company Entered into a Transaction

question 12

Multiple Choice

On January 1, 2013, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: $\begin{array}{lrr}&\text { Moody }& \text { Osorio }\\\text { Cash } & \$ 180 & \$ 40 \\\text { Receivables } & 810 & 180 \\\text { Inventories } & 1,080 & 280 \\\text { Land } & 600 & 360 \\\text { Buildings (net) } & 1,260 & 440 \\\text { Equipment (net) } & 480 & 100\\\text { Accounts payable } & (450) \\\text { Long-term liabilities } & (1,290) \\\text { Common stock }(\$ 1 \text { par }) &(330) \\\text { Common stock }(\$ 20 \text { par }) &&(240) \\\text { Additional paid-in capital } & (1,080) &(340) \\\text { Retained earnings } & (1,260) &(340) \end{array}$ Note: Parentheses indicate a credit balance. In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60.
What amount was recorded as the investment in Osorio?

• A)$930.
• B)$820.
• C)$800.
• D)$835.
• E)$815.

---

Definitions:

Psychological Needs

Fundamental emotional or mental requirements that, if not met, can lead to psychological issues. These include the needs for love, esteem, belonging, and self-actualization.

Abuse Victims

Individuals who have suffered harm or adverse treatment, typically involving violence, coercion, or manipulation, often by someone in a position of power or trust.

Teen Years

A developmental period in human growth spanning from ages 13 to 19, characterized by significant physical, psychological, and social changes.

Trauma

A deeply distressing or disturbing experience, often resulting in lasting psychological and emotional impact.