Reference no: EM131220274
On December 31, 20X8, Mercury Corporation acquired 100 percent ownership of Saturn Corporation. On that date, Saturn reported assets and liabilities with book values of $300,000 and $100,000, respectively, common stock outstanding of $50,000, and retained earnings of $150,000. The book values and fair values of Saturn's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000.
1) Based on the preceding information, what amount of differential will appear in the consolidating entries required to prepare a consolidated balance sheet immediately after the business combination, if the acquisition price was $240,000?
a) $0
b) $40,000
c) $25,000
d) $5,000
2) Based on the preceding information, what amount of goodwill will be reported if the acquisition price was $240,000?
a) $0
b) $40,000
c) $15,000
d) $35,000
3) Based on the preceding information, what amount of goodwill will be reported if the acquisition price was $195,000?
a) $0
b) $40,000
c) $15,000
d) $35,000
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