The Following Information Applies to Questions 21-26

question 40

Multiple Choice

The following information applies to Questions 21-26
On December 31, 20X8, X Company acquired controlling ownership of Y Company. A consolidated balance sheet was prepared immediately. Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 20X8, X Company provided consulting services to Y Company and has not yet paid for them. There were no other receivables or payables between the companies at December 31, 20X8.

-Based on the information given,what was the fair value of Y Company as a whole at the date of acquisition?

• A) $155,000
• B) $110,000
• C) $115,000
• D) $135,000

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

Inventory

Refers to the goods and materials that a business holds for the ultimate goal of resale.

Government Securities

Financial instruments issued by the government to finance its expenditures, offering a relatively safe investment.

Money Market Accounts

Savings accounts that typically offer higher interest rates in exchange for larger deposit balances, with limited transaction privileges.