Reference no: EM132894319

To date, management of Big Bear Inc. has not had much success in Arrowhead business and is deciding whether a write-down at this time is appropriate. Management has received an offer to purchase the division for $400,000 (fair value). All identifiable assets' and liabilities' book and fair value amounts are the same.

Problem 1: When Big Bear Inc. acquires Arrowhead business, how much was the excess of cost of the purchase over the fair market value of the net assets of Arrowhead?

Select one:

a. 500,000

b. 400,000

c. 150,000

d. 160,000

Problem 2: What is the book value of the Arrowhead division's net asset as of December 31, 2016?

Select one:

a. 420,000

b. 440,000

c. 400,000

d. 500,000