J% 8f Sinker Company\'s common stock on January 1 2URB for $360,000. On that dat

Question

J% 8f Sinker Company's common stock on January 1 2URB for $360,000. On that date, Sinker reported common stock of $240,000 a retained earnings of $120,000. Based on these facts, we can conclude that A) the fair value of Sinker's net assets were equal to the book value on the date of B) the amount reported in Yost's investment in Sinker Company account on January C) the fair value of the NCI in the Net Assets of Sinker Company on January 1,20x6 D) Yost Company reported a gain on a bargain purchase as a result of the acquisition 1, 20X6 was $480,000 was $120,000 acquisition of Sinker On January 1, 20X7, Panther Company acquired 100 percent of Sable Company for $675,000. On that date Sable reported common stock of $350,000 and retained earnings of $300,000. The fair value of Sable's building was determined to be $20,000 over book value, and it was determined that the book value of Sable's inventory was overvalued by $5,000. What amount of the differential will be applied to goodwill? A) $25,000 B) $10,000 C) $5,000 D) $0 3. Page 1

Explanation / Answer

3 Fair value of net assets acquired=350000+300000+20000-5000= $665000 Goodwill = 675000-665000 = $10000 Option B is correct

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