On January 2, 2017, NIU Purchased 100% of Huskie Corp

question 77

Multiple Choice

On January 2, 2017, NIU purchased 100% of Huskie Corp. for $128,000. The book value of the Huskie's assets is $120,000, and the book value of its liabilities is $60,000. The fair market value of the net assets is $80,000. Inventory is recorded in Huskie's financial statements at $20,000, but has a fair market value of $30,000. NIU should report inventory at

• A)$20,000.
• B)$25,000.
• C)$30,000.
• D)cannot determine from information given.

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Definitions:

T-Bill

A T-Bill, or Treasury Bill, is a short-term government security issued at a discount from the face value and pays no interest, but is redeemed at its full face value at maturity.

Risky Portfolio

A collection of investments with higher expected returns that comes with a greater level of risk and volatility compared to the overall market.

Standard Deviation

A statistical measure that quantifies the variation or spread of a set of numbers from its average, used to gauge volatility.

Risk-Free Asset

An investment that is expected to deliver its return with certainty, with government bonds often considered as the closest example.