Problem
On January 1,2013, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. to acquire these shares, Moody issues $400 long term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $ 10 per share. Moody paid $ 20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheet for the two companies were as follows:
Moody Osorio
Cash $ 180 $ 40
Receivables 180 40
Inventories 810 180
Land 1,080 280
Building(net) 1,260 440
Equipment(net) 480 100
Account Payable (450) (80)
Long term liabilities (1,290) (400)
Common stock($ 1 par) (330)
Common stock($20 par) (240)
Additional Paid in capital (1080) (340)
Retained earnings (1260) (340)
Note: Parentheses indicate a credit balance.
In Moody appraisal of Osorio, three asset were deemed to be undervalued on the subsidiary's books: Inventory by $ 10, Land by $ 40, Building by $ 60.
Compute the amount of consolidated land at date of acquisition.
$ 320
$ 1,000
$ 400
$ 960
$ 920.