Paris,IncHolds 100 Percent of the Common Stock of Stockholm Company,an

question 13

Multiple Choice

Paris,Inc.holds 100 percent of the common stock of Stockholm Company,an investment acquired for $520,000.Immediately following the combination,Paris's net assets have a book value of $900,000 and a fair value of $1,050,000.The book and fair value of Stockholm's net assets on the date of combination are $350,000 and $425,000,respectively.Immediately following the combination,a consolidated balance sheet is prepared.
-Based on the information given above,what will be the amount of net assets reported in the consolidated balance sheet?

• A)$1,420,000
• B)$1,325,000
• C)$1,250,000
• D)$900,000

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Definitions:

Aggregate Supply

The total supply of goods and services produced within an economy at a given overall price level in a given period.

Sticky-Price Theory

A theory proposing that prices of goods do not immediately adjust to changes in economic conditions, causing economic inefficiencies.

Aggregate Demand

The grand total of all demands for goods and services within an economic sphere, established at a certain collective price level during a fixed timeframe.

Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period, at a given price level.