Prime Company Acquired 100 Percent of the Voting Common Shares

question 37

Multiple Choice

Prime Company acquired 100 percent of the voting common shares of Standard Video Corporation,its bitter rival,by issuing bonds with a par value and fair value of $150,000.Immediately prior to the acquisition,Prime reported total assets of $500,000,liabilities of $280,000,and stockholders' equity of $220,000.At that date,Standard Video reported total assets of $400,000,liabilities of $250,000,and stockholders' equity of $150,000.Included in Standard's liabilities was an account payable to Prime in the amount of $20,000,which Prime included in its accounts receivable.
-Based on the preceding information,what amount of total assets was reported in the consolidated balance sheet immediately after acquisition?

• A)$650,000
• B)$880,000
• C)$920,000
• D)$750,000

---

Definitions:

Improperly Made

Refers to items or products that have been constructed or produced in a manner that fails to meet the required or expected standards.

Breach of Contract

The failure to perform as stated in a contract without a legitimate legal excuse.

Negligence

An unintentional, careless act or omission that causes injury to another person or his property.

Sale of Goods Act

Legislation governing the sale of goods, providing rights and obligations for both buyers and sellers.