Wilkins Inc. acquired 100% of the voting common stock of Granger Inc. on January 1, 2021. The book value and fair value of Granger's accounts on that date (prior to creating the combination)are as follows, along with the book value of Wilkins's accounts: Assume that Wilkins issued preferred stock with a par value of $260,000 and a fair value of $500,000 for all of the outstanding shares of Granger in an acquisition business combination. What will be the balance in the consolidated Inventory and Land accounts?
A)$440,000, $540,000.
B)$440,000, $560,000.
C)$410,000, $540,000.
D)$410,000, $560,000.
E)$390,000, $460,000.

Question

Wilkins Inc. acquired 100% of the voting common stock of Granger Inc. on January 1, 2021. The book value and fair value of Granger's accounts on that date (prior to creating the combination)are as follows, along with the book value of Wilkins's accounts:  Assume that Wilkins issued preferred stock with a par value of $260,000 and a fair value of $500,000 for all of the outstanding shares of Granger in an acquisition business combination. What will be the balance in the consolidated Inventory and Land accounts?
A)$440,000, $540,000. 
B)$440,000, $560,000. 
C)$410,000, $540,000. 
D)$410,000, $560,000. 
E)$390,000, $460,000.

Quizplus · Accepted Answer

To find the balance in the consolidated Inventory account, we need to add the book values of Wilkins and Granger ($300,000 + $150,000) and the fair value of inventory in Granger ($90,000).

Consolidated Inventory = $300,000 + $150,000 + $90,000 = $540,000

To find the balance in the consolidated Land account, we need to add the book values of Wilkins and Granger ($200,000 + $100,000) and the excess fair value allocated to Land in the acquisition ($70,000).

Consolidated Land = $200,000 + $100,000 + $70,000 = $370,000

Therefore, the answer is B.