On December 31,20X8,Mercury Corporation Acquired 100 Percent Ownership of Saturn

question 42

Multiple Choice

On December 31,20X8,Mercury Corporation acquired 100 percent ownership of Saturn Corporation.On that date,Saturn reported assets and liabilities with book values of $300,000 and $100,000,respectively,common stock outstanding of $50,000,and retained earnings of $150,000.The book values and fair values of Saturn's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000.
-Based on the preceding information,what amount of differential will appear in the eliminating entries required to prepare a consolidated balance sheet immediately after the business combination,if the acquisition price was $240,000?

• A)$0
• B)$40,000
• C)$25,000
• D)$5,000

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