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

question 3

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 cash after recording the transaction.

• A)$220.
• B)$185.
• C)$200.
• D)$205.
• E)$215.

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Definitions:

Delaying Sales

A strategy where sellers postpone transactions in anticipation of better market conditions or prices.

Accelerating Expenses

Expenses that increase at a faster rate than usual, often outpacing revenue growth.

Channel Stuffing

A practice where a company inflates its sales and earnings figures by deliberately sending retailers along its distribution channel more products than they can sell to the end-user.

Earned Revenue

Income a company receives from its business activities, such as sales of goods or services, in contrast to revenue from investments or other sources.