Problem

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2012. At that date, Glen owns only three assets and has no liabilities:

                                                  Book Value            Fair value

 Inventory (FIFO method)              $ 40,000             $ 50,000     

 Equipment(10 Year life)                80,000                 75,000

 Building(20 Year life)                    200,000              300,000      

If Watkins pays $ 450,000 in cash for Glen, at what amount would Glen's inventory acquired be represented in a December 31, 2012 consolidated balance sheet?

 0 $ 10,000

 0 $   0

 0 $ 90,000

 0 $ 40,000

 0 $ 50,000