On January 1, 20X1, the Moody Company Entered into a Transaction

question 67

Multiple Choice

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 acquisition. 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 equipment at date of acquisition.

• A) $480.
• B) $580.
• C) $559.
• D) $570.
• E) $560.

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Definitions:

Unconscious Feelings

Emotions and desires not immediately available to conscious awareness, often influencing behavior in unseen ways.

Systematic Desensitization

A behavior therapy used to reduce phobic responses and anxiety through gradual exposure to the feared object or situation coupled with relaxation exercises.

Anxiety-Arousing

Inducing or leading to increased feelings of anxiety or stress.

Counterconditioning

A behavior therapy technique that involves replacing an unwanted response to a stimulus with a desired response.