Cheers Acquired 100% of Tapp's Shares for $144,000

question 18

Multiple Choice

$\begin{array}{|l|r|r|r}\hline& \text { Cheers Co } & \text { Tapp Ltd } & \underline{\text { Tapp Ltd }} \\&\text { Book Value } & \text { Book Value } & \underline{\text { Fair Value }} \\\hline\text { Current assets } & \$ 512,000 & \$ 62,400 & \$ 65,600 \\\hline \text { Net capital assets } & \underline{448,000} & \underline{97,600} & \underline{110,400} \\\hline & \$ \underline{960,000} & \$ \underline{160,000} & \\\hline \text { Current liabilities } & \$ 96,000 & \$ 12,800 & 12,800 \\\hline \text { Long-term debt } & 288,000 & 35,200 & 40,000 \\\hline \text { Share capital } & 320,000 & 64,000 & \\\hline \text { Retained earnings } & \underline{256,000} & \underline{48,000} & \\\hline & \$ \underline{\underline{960,000}} & \$ \underline{160,000} & \\\hline\end{array}$ Cheers acquired 100% of Tapp's shares for $144,000. The condensed statements of financial position for Cheers and Tapp are given above, as well as the fair values of Tapp's assets and liabilities on the acquisition date. On Cheers's consolidated statement of financial position at the acquisition date, what is the total shareholders' equity?

• A)$576,000
• B)$624,000
• C)$688,000
• D)$11,888,000

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Definitions:

Combining Form

A word root to which a vowel is added for easier pronunciation before it is combined with another term, often used in medical terminology.

Gland

An organ in the body that secretes chemical substances for use in the body or for discharge into the surroundings.

Femor/o

A prefix in medical terminology related to the femur or thigh bone.

Combining Form

A word root with a combining vowel used to create medical terms.