The Fair Market Value of the Fixed Assets of Markco

question 202

Multiple Choice

The fair market value of the fixed assets of Markco, Inc. is $8,500.
Big-T paid $13,000 for Markco, Inc. with funds from a long-term debt offering. The purchase method of accounting is used.
What is the total amount of debt and equity on the books of Big-T after the merger?

• A) $17,300
• B) $21,800
• C) $25,800
• D) $30,300
• E) $36,800

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Definitions:

Preoperational Thinking

A stage in Piaget's theory of cognitive development where children from about 2 to 7 years old develop memory and imagination, but do not yet think logically.

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The mental skills and capacities for learning, reasoning, problem-solving, and processing information.

Theory Of Mind

The ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and to others and to understand that others have beliefs, desires, and intentions that are different from one's own.

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