The Following Information Applies to Questions 41-45

question 11

Multiple Choice

The following information applies to Questions 41-45
On January 1, 20X6, Polka Co. (Polka) and Strauss Co. (Strauss) had condensed balance sheets as follows:
On January 2, 20X6, Polka borrowed $90,000 and used the proceeds to acquire 90% of the outstanding common shares of Strauss. This debt is payable in ten equal annual principal and accrued interest payments beginning December 30, 20X6. On the acquisition date, the fair value of Strauss was $100,000, and the excess cost of the investment over Strauss's carrying amount of acquired net assets should be allocated 60% to inventory and 40% to goodwill.
-Stockholders' equity on the January 2,20X6,consolidated balance sheet should be:

• A) $85,000
• B) $80,000
• C) $90,000
• D) $130,000

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Definitions:

Financial Account

A component of the balance of payments that records transactions of financial assets between residents of one country and the rest of the world.

Exchange Rate

The price of one currency in terms of another, allowing for the conversion of monetary values between countries.

Demand for Currency

The desire or need for holding cash as opposed to other forms of wealth or assets.

Pegged Currencies

A regime where a country's currency value is fixed relative to another currency or a basket of currencies.