REFERENCE: Ref.02_04 on January 1,20X1,the Moody Company Entered into a Transaction for Transaction

question 24

Multiple Choice

REFERENCE: Ref.02_04
On January 1,20X1,the Moody company entered into a transaction for 100% of the outstanding common stock of Osorio Company.To acquire these shares,Moody issued $400 in long-term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share.Moody paid $20 to lawyers,accountants,and brokers for assistance in bringing about this purchase.Another $15 was paid in connection with stock issuance costs.Prior to these transactions,the balance sheets for the two companies were as follows: Note: Parentheses indicate a credit balance.
In Moody's appraisal of Osorio,three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10,Land by $40,and Buildings by $60.
-Compute the amount of consolidated land at date of combination.

• A)$1,000.
• B)$816.
• C)$940.
• D)$916.
• E)$920.

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Definitions:

Tropical Diseases

Infectious diseases that are prevalent in or unique to tropical and subtropical regions, often transmitted by insects or contaminated water.

Conquistadors

Spanish explorers and soldiers who participated in the conquest of the Americas in the 16th century, often for gold, glory, and the spread of Christianity.

Mexica

Refers to the indigenous people who were the rulers of the Aztec Empire, centered in what is now Mexico City, before the Spanish conquest in the 16th century.