Suppose Parrot Mfg

question 188

Multiple Choice

Suppose Parrot Mfg. purchases Clint Enterprises for $120 million in cash. For purposes of the acquisition, Clint's fixed assets were appraised at $95 million. Further, assume Clint Enterprises has working capital of $15 million and no long-term debt. If Parrot Mfg. uses the purchase accounting method to account for the acquisition, goodwill of ______________ is created.

• A) $10 million
• B) $15 million
• C) $25 million
• D) $35 million
• E) $80 million

---

Definitions:

Annual Revenues

The total income generated by a business from its operations over a fiscal year before any expenses are subtracted.

Voting Securities

Financial instruments that give the holder the right to vote on matters of corporate policy and the composition of the board of directors.

Non-Affiliates

Entities or individuals that are not directly connected through ownership or control with another entity.

Audit Committee

A subcommittee of a company's board of directors that is responsible for overseeing financial reporting and disclosure.