The Following Data Pertains to Questions

question 10

Multiple Choice

The following data pertains to questions
Parent and Sub Inc had the following balance sheets on December 31,2008: On January 1,2009 Parent purchased all of Sub Inc's Common Shares for $40,000 in cash.On that date,Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000,respectively.Assuming that Consolidated Financial Statements were prepared on that date,answer the following:
-The Current Assets of the combined entity should be valued at:

• A)$7,000
• B)$170,000
• C)$86,000
• D)$114,000

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Definitions:

Floor Price

The minimum price level set for a financial security, commodity, or good, below which it cannot be sold in the market.

Convertible Bonds

Convertible bonds are securities that can be turned into a specified amount of equity in the company that issued them, typically at the choice of the person holding the bond, during specific periods of their duration.

Straight-Debt Yield

The return an investor can expect to earn if they hold a bond to maturity without the issuer defaulting, typically not including the effects of callability.

Exchange Ratio

The ratio at which one company’s shares will be exchanged for another in the event of a merger or acquisition.