The following information applies to Questions 41-45
On January 1, 20X6, Polka Co. (Polka) and Strauss Co. (Strauss) had condensed balance sheets as follows:
On January 2, 20X6, Polka borrowed $90,000 and used the proceeds to acquire 90% of the outstanding common shares of Strauss. This debt is payable in ten equal annual principal and accrued interest payments beginning December 30, 20X6. On the acquisition date, the fair value of Strauss was $100,000, and the excess cost of the investment over Strauss's carrying amount of acquired net assets should be allocated 60% to inventory and 40% to goodwill.
-Current liabilities on the January 2,20X6,consolidated balance sheet should be:
A) $49,000
B) $30,000
C) $40,000
D) $50,000

Question

The following information applies to Questions 41-45
On January 1, 20X6, Polka Co. (Polka) and Strauss Co. (Strauss) had condensed balance sheets as follows:
  On January 2, 20X6, Polka borrowed $90,000 and used the proceeds to acquire 90% of the outstanding common shares of Strauss. This debt is payable in ten equal annual principal and accrued interest payments beginning December 30, 20X6. On the acquisition date, the fair value of Strauss was $100,000, and the excess cost of the investment over Strauss's carrying amount of acquired net assets should be allocated 60% to inventory and 40% to goodwill.
-Current liabilities on the January 2,20X6,consolidated balance sheet should be:
A) $49,000 
B) $30,000 
C) $40,000 
D) $50,000

Quizplus · Accepted Answer

The current liabilities on the consolidated balance sheet should include all short-term obligations due within the year. The correct amount is $49,000, which likely includes all relevant current liabilities for the period.

The Following Information Applies to Questions 41-45