Reference no: EM133056411

Question - Cornflake Corp. - Penguin, Inc. acquires 100% of the outstanding shares of Cornflake Corp. for $2,250,000 and accounts for the transaction using the purchase method. Cornflake's balance sheet at the acquisition date is as follows:

Cornflake, Corp. Balance Sheet Acquisition Date
	Historical Cost	Current Market Value
Assets
Current Assets	$900,000	$1,775,000
Depreciable Assets less Accumulated Depreciation Goodwill	$875,000	$1,250,000
Total Assets	$1,775,000
Liabilities and Equities
Liabilities	$1,100,000	$1,100,000
Deferred Income Tax Liability	$125,000	$125,000
Shareholders' Equity	$550,000
Total Liabilities and Equities	$1,775,000

Required -

A. Based on the information concerning Cornflake Corp. what is the market value of the company's shareholders' equity at the acquisition date?

B. Based on the information concerning Cornflake Corp. what is the value of the goodwill related to the acquisition?

C. Based on the information concerning Cornflake Corp. by what amount would Penguin increase depreciable assets when it consolidates Cornflake on the acquisition date?