Task: On January 1, 2004, Polk Corporation and Strass Corporation had condensed balance sheets as follows:
Polk Strass
Current Assets 70,000 20,000
Non current Assets 90,000 40,000
Total Assets 160,000 60,000
Current Liabilities 30,000 10,000
Long Term Debt 50,000 0
Shareholders Equity 80,000 50,000
Total Liabilty & Owners Equity 160,000 60,000
On January 2, 2004, Polk borrowed $60,000 and used the proceeds to purchase 90 percent of the outstanding common shares of Strass. This debt is payable in 10 equal annual principal payments, plus interest, beginning December 31, 2004. The excess cost of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). On a consolidated balance sheet as of January 2, 2004,
Q1. Current assets should be:
a. $99,000
b. $96,000
c. $90,000
d. $79,000
Q2. Noncurrent assets
a. $130,000
b. $134,000
c. $136,000
d. $140,000
Q3. Current liabilities
a. $50,000
b. $46,000
c. $40,000
d. $30,000
Q4. Noncurrent liabilities, including noncontrolling interest
a. $115,000
b. $109,000
c. $104,000
d. $55,000
Q5. Stockholders' equity
a. $80,000
b. $85,000
c. $90,000
d. $130,000