The excess was assigned to appropriate assets

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Reference no: EM133153655

1. Wade Company purchased 65 percent of Ten Corporation's voting common stock for $120,000 more than underlying book value, half of which is attributable to goodwill and the other half to land. Wade Company's control over Ten is only temporary. What amount of the purchase differential should be assigned to Land following the acquisition?

A. $ - 0 -

B. $39,000

C. $60,000

D. $120,000

2. On January 1, 2003, Sun acquired 70 percent of Ryan's voting common stock for $450,000, an amount of $30,000 higher than the underlying book value of Ryan's net assets. The fair value of Ryan's net assets was equal to their book values. Any purchase differential is attributable to goodwill. On December 31, 2004, the consolidated balance sheet goodwill should be reported at:

A. zero.

B. the purchase differential.

C. the purchase differential minus the differential amortization.

D. the purchase differential divided by 70 percent.

3. Dickens Corporation issued nonvoting preferred stock with a fair market value of $1,200,000 in exchange for all the assets and liabilities of D&E Corporation. D&E's net assets on the date of the acquisition had a book value of $800,000 and a fair value of $1,050,000. Also, Dickens issued common stock with a fair market value of $50,000 to legal counsel for arranging the transaction. As a result of this business combination DIcken's net assets increased by:

A. $800,000

B. $1,050,000

C. $1,200,000

D. $1,250,000

4. Ayne Company acquired a subsidiary in a combination accounted for as a purchase. The appraisal value of the identifiable net assets acquired exceeded the acquisition price. In the preparation of consolidated financial statements the excess was assigned to the appropriate assets, reducing them to zero. Any remaining excess should be recognized in the consolidated financial statements as:

A. a deferred credit.

B. negative goodwill.

C. an extraordinary gain.

D. a prior period adjustment.

Reference no: EM133153655

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