Presented Below Are the Financial Balances for the Atwood Company

question 14

Multiple Choice

Presented below are the financial balances for the Atwood Company and the Franz Company as of December 31, 2012, immediately before Atwood acquired Franz. Also included are the fair values for Franz Company's net assets at that date. $\begin{array}{lrcr}&\text { Atwood } & \text { Franz Co } & \text { Franz Co. }\\&&\text { (all numbers are in thousands) }\\&\text { Book Value }&\text { Book Value }&\text { Fair Value }\\&12 / 31 / 14&12 / 31 / 14&12 / 31 / 14\\\text { Cash } & \$ 870 & \mathbf{\$ 2 4 0} & \mathbf{\$ 2 4 0} \\\text { Receivables } & 660 & 600 & 600 \\\text { Inventory } & 1,230 & 420 & 580 \\\text { Land } & 1,800 & 260 & 250 \\\text { Buildings (net) } & 1,800 & 540 & 650\\\text { Equipment (net) } & 660 & 380 & 400 \\\text { Accounts payable } & (570) & (240) & (240) \\\text { Accrued expenses } & (270) & (60) & (60) \\\text { Long-term liabilities } & (2,700) & (1,020) & (1,120) \\\text { Common stock }(\$ 20 \text { par) } & (1,980) & &\\\text { Common stock (\$5 par) } & & (420) \\\text { Additional paid-in capital } & (210) & (180) \\\text { Retained earnings } & (1,170) & (480) \\\text { Revenues } & (2,880) & (660) \\\text { Expenses } & 2,760 & 620\end{array}$ Note: Parenthesis indicate a credit balance Assume a business combination took place at December 31, 2012. Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid to effect this acquisition transaction. To settle a difference of opinion regarding Franz's fair value, Atwood promises to pay an additional $5.2 (in thousands) to the former owners if Franz's earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is $5 (in thousands) .
Compute consolidated land at date of acquisition.

• A)$2,060.
• B)$1,800.
• C)$260.
• D)$2,050.
• E)$2,070.

---

Definitions:

Supervising

The process of overseeing, directing, and managing the work and performance of individuals or teams to achieve organizational objectives.

Utilization Rates

The ratio of actual time used to the potential time available for production, indicating the efficiency of resource use.

Managerial Accounting

A field of accounting focused on providing financial information within a company to assist in decision-making and strategy development.

Financial Accounting

The field of accounting concerned with the summary, analysis, and reporting of financial transactions pertaining to a business.