Current assets-noncurrent assets-stockholders equity


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

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Finance Basics: Current assets-noncurrent assets-stockholders equity
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