The Following Data Pertains to Questions

question 36

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:
-Assuming this Business Combination was to be accounted for under the Pooling of Interests Method,the Shareholder's Equity section of the Consolidated Balance Sheet would show what amount?

• A)$121,000
• B)$90,000
• C)$19,000
• D)$98,000

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Definitions:

Stockholders' Equity

The ownership claim on a corporation's assets that remains after all liabilities are accounted for, denoting shareholder interest.

Current Assets

Short-term assets that are expected to be converted into cash within one year or within the operating cycle of a business.

Interest Expense

The cost incurred by an entity for borrowed funds, which is charged as an expense on the income statement.