On January 1,20X9,Paradox Company Acquired All of Sirius Company's Common

question 41

Multiple Choice

On January 1,20X9,Paradox Company acquired all of Sirius Company's common shares,for $365,000 cash.On that date,Sirius's balance sheet appeared as follows:
The fair values of all of Sirius's assets and liabilities were equal to their book values except for inventory that had a fair value of $85,000,land that had a fair value of $60,000,and buildings and equipment that had a fair value of $250,000.Buildings and equipment have a remaining useful life of 10 years with zero salvage value.Paradox Company decided to employ push-down accounting for the acquisition.Subsequent to the combination,Sirius continued to operate as a separate company.
-Based on the preceding information,what amount of differential will arise in the consolidation process?

• A)$0
• B)$5,000
• C)$15,000
• D)$65,000

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied that is equal to the quantity demanded at the market equilibrium price.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded, also known as the market-clearing price.

Equilibrium Quantity

The quantity of goods or services that are supplied and demanded at the equilibrium price, where the amount producers are willing to sell equals the amount consumers are willing to buy.

Price of Ingredients

The cost of raw materials used in the production of goods, which can impact the final price of the product and profitability of producers.