Pinehollow Acquired 70% of the Outstanding Stock of Stonebriar by Issuing

question 18

Multiple Choice

Pinehollow acquired 70% of the outstanding stock of Stonebriar by issuing 70,000 shares of its $1 par value stock.The shares have a fair value of $15 per share.Pinehollow also paid $25,000 in direct acquisition costs.Prior to the transaction, the companies have the following balance sheets:
$\begin{array}{lrr}\text { Assets } &\text { Pinehollow } & \text { Stonebriar }\\\text { Cash } & \$ 150,000 & \$ 50,000 \\\text { Accounts receivable } & 500,000 & 350,000 \\\text { Inventory } & 900,000 & 600,000 \\\text { Property, plant, and equipment (net) } & \underline{1,850,000} & 900,000 \\\text { Total assets } & \$ 3,400,000 & \$ 1,900,000\\\\\text { Liabilities and Stockholders' Equity }\\ \text { Current liabilities } & \$ 300,000 & \$ 100,000 \\\text { Bonds payable } & 1,000,000 & 600,000 \\\text { Common stock ( } \$ 1 \text { par) } & 300,000 & 100,000 \\\text { Paid-in capital in excess of par } & 800,000 & 900,000 \\\text { Retained earnings } & \underline{1,000,000} & \underline{200,000} \\\text { Total liabilities and equity } & \$ 3,400,000 & \$ 1,900,000\end{array}$

The fair values of Stonebriar's inventory and plant, property and equipment are $700,000 and $1,000,000, respectively.What is the amount of the non-controlling interest that will be included in the consolidated balance sheet immediately after the acquisition

• A)$450,000
• B)$360,000
• C)$315,000
• D)$420,000

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Definitions:

Vastus Lateralis

A muscle part of the quadriceps group, situated on the lateral side of the thigh.

Gluteus Maximus

The largest and most superficial of the three gluteal muscles, responsible for the shape of the buttocks and movement of the hip and thigh.

Biceps Femoris

A muscle of the thigh that is part of the hamstrings, involved in knee flexion and thigh extension.

Quadriceps Group

A muscle group located in the front of the thigh, consisting of four muscles that extend the knee and provide leg extension.