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

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Definitions:

Atrial Depolarization

The electrical activation of the atria of the heart, typically represented by the P wave in an electrocardiogram (ECG).

Cardiology

The branch of medicine that deals with disorders of the heart and blood vessels.

Lead Arrangement

The configuration or placement of electrodes on the body for the purpose of monitoring electrical activity, commonly used in ECG (Electrocardiogram) procedures.

Electrodes

Conductive materials that are used to establish electrical contact with a nonmetallic part of a circuit.