The Financial Statements for Campbell, Inc

question 63

Multiple Choice

The financial statements for Campbell, Inc., and Newton Company for the year ended December 31, 2021, prior to the business combination whereby Campbell acquired Newton, are as follows (in thousands) : On December 31, 2021, Campbell obtained a loan for $650 and used the proceeds, along with the transfer of 35 shares of its $10 par value common stock, in exchange for all of Newton's common stock. At the time of the transaction, Campbell's common stock had a fair value of $40 per share.In connection with the business combination, Campbell paid $25 to a broker for arranging the transaction and $30 in stock issuance costs. At the time of the transaction, Newton's equipment was actually worth $1,450 but its buildings were only valued at $590.Compute the goodwill arising from this acquisition at December 31, 2021.

• A) $0.
• B) $55.
• C) $100.
• D) $140.
• E) $230.

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Definitions:

Margin Of Safety

The difference between the actual or expected profitability of a project and the break-even point, often used as a risk assessment measure.

Contribution Format

An income statement format that separates fixed and variable costs, highlighting the contribution margin.

Income Statement

An accounting document reflecting a business's earnings, outlays, and gains for a particular period.

Tile Manufacturer

A company specializing in the production of tiles, which are pieces of hard-wearing material such as ceramic, stone, or metal used for covering roofs, floors, walls, or other objects.