Parsons Company Acquired 90% of Roxy Company Several Years Ago

question 75

Multiple Choice

Parsons Company acquired 90% of Roxy Company several years ago for which the consideration transferred included an amount paid for goodwill of $200,000 at that date. During 2020 an analysis of the fair value of Roxy's assets determined an impairment of goodwill in the amount of $50,000.At what amount would consolidated goodwill be reported for 2020?

• A) $150,000.
• B) $200,000.
• C) $50,000.
• D) $0.
• E) $135,000.

Calculate the cost of capital for divisions within a firm.

Compute the weighted average cost of capital (WACC) for firms.

Identify the impact of market conditions and firm-specific risk factors on cost of equity and WACC.

Calculate the after-tax cost of debt.

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Definitions:

Positive Correlation

A statistical relationship in which the values of two variables increase together or decrease together.

Negative Correlation

A statistical relationship in which the value of one variable increases while the other variable decreases.

Correlational Study

A type of research method that examines the relationship between two or more variables to determine whether they are associated or have a correlation, without implying causation.

Tentative Explanation

An initial, provisional hypothesis proposed to explain a phenomenon or observation, subject to further testing and investigation.