Company P Acquired 80% of the Outstanding Common Stock of the Company

question 44

Multiple Choice

Company P acquired 80% of the outstanding common stock of the Company S by issuing common stock with a market value of $550,000.The balance sheet of Company S was as follows on the acquisition date:
$$\begin{array} { l r l r } \text { Assets } & & \text { Liabilities and Equity } & \\\text { Cash } & \$ 50,000 & \text { Liabilities } & \$ 120,000 \\\text { Inventory } & 120,000 & \text { Common stock, } \$ 10 \text { par } & 100,000 \\\text { Land } & 100,000 & \text { Other paid-in capital } & 150,000 \\\text { Building (net) } & 350,000 & \text { Retained earnings } & 250,000 \\\quad \text { Total } & \$ \underline { 620,000 } & \text { Total } & \$ \underline { 620,000 }\end{array}$$ The market values were as follows: Inventory, $130,000; Land, $120,000; Building, $400,000.What is the amount that will appear as Cash Provided (Used) by Investing Activities on the consolidated statement of cash flows, as a result of this purchase?

• A)$600,000
• B)$500,000
• C)$50,000
• D)$0

---

Definitions:

Job Fairs

Events that bring together employers and job seekers, allowing companies to showcase opportunities and candidates to network.

Incentive

Something that motivates or encourages someone to take a particular action, such as a reward or benefit.

Apple Orchard Owner

An individual or entity that manages and operates an apple orchard, responsible for the cultivation and harvest of apples.

Decentralizing Decision Making

The distribution of decision-making authority away from a central figure or location to lower-level employees or divisions within an organization.