Pagach Company Purchased 100% of the Voting Common Stock of Rage

question 3

Multiple Choice

Pagach Company purchased 100% of the voting common stock of Rage Company for $1,800,000. The following book and fair values are available: The bonds payable will appear on the consolidated balance sheet

• A) at $300,000 (with no premium or discount shown).
• B) at $300,000 less a discount of $50,000.
• C) at $0; assets are recorded net of liabilities.
• D) at an amount less than $250,000 since it is a bargain purchase.

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Definitions:

Strategic Business Unit

A division or unit within a company that has its own mission, objectives, and competitors, and is managed independently.

Revenue Centre

A segment or area of a business responsible for generating sales and revenue, without direct responsibility for profit or cost.

Investment Centre

A business unit or division within an organization that is responsible for generating its own revenues and managing its own investments and expenses.

Profit Centre

A business unit or department within an organization that is responsible for generating its own revenue and profit.