On January 1, 2018, Jay Company acquired all the outstanding ownership shares of Zee Company....
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On January 1, 2018, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zees acquisition-date fair values, Jay concluded that the carrying value of Zees long-term debt (8-year remaining life) was less than its fair value by $29,600. At December 31, 2018, Zee Companys accounts show interest expense of $13,440 and long-term debt of $480,000. What amounts of interest expense and long-term debt should appear on the December 31, 2018, consolidated financial statements of Jay and its subsidiary Zee?
| Interest expense | Long-term debt | |
| a. | $17,140 | $509,600 |
| b. | $17,140 | $505,900 |
| c. | $9,740 | $509,600 |
| d. | $9,740 | $505,900 |
Multiple Choice
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Option A
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Option B
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Option C
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Option D
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