Rivendell Corporation and Foster Company merged as of January 1,20X9. To effect

Question

Rivendell Corporation and Foster Company merged as of January 1,20X9. To effect the merger, Rivendell paid finder's fees of $40,000, legal fees of $13,000, audit fees related to the stock issuance of $10,000, stock registration fees of S5,000, and stock listing application fees of $4,000. 2. Based on the preceding information, under the acquisition method: A. $72,000 of stock issue costs are treated as goodwill. B. $19,000 of stock issue costs are treated as a reduction in the issue price. C. $19,000 of stock issue costs are expensed. D. $72,000 of stock issue costs are expensed. Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired 100 percent ownership. The fair value of Plummet's net assets was determined to be $510,000 on that date. 3. Based on the preceding information, what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Zenith paid $550,000 for the acquisition? A. $0 B. $50,000 $150,000 $40,000 4. Based on the preceding information, what amount will be recorded by Zenith as its investment in Plummet, if it paid $500,000 for the acquisition? A. $610,000 B. $400,000 C. $500,000 $510,000 5. The fair value of net identifiable assets of a reporting unit of X Company is $300,000. On X Company's books, the carrying value of this reporting unit's net assets is $350,000, including $60,000 goodwill. If the fair value of the reporting unit as a whole is $335,000, what amount of goodwill impairment will be recognized for this unit? A. SO B. $10,000 Fu 335 C. $25,000 D. $35,000

Explanation / Answer

-Book Value of net asset of Plummet Corporation at the time of acquistion: $400,000

-Fair Value of Plummet Corporation's net asset: $510,000

Amount to be recorded by Zenith as its investment in Plummet if it paid $500,000 for the acquisition:

(C). $5500,000

Explanation:

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