During 2007, Bond Company Purchased the Net Assets of May $\begin{array}{ll}\text { Current assets } & \$ 540,000 \\\text { Noncurrent assets } & {1,260,000}\\&{\$ 1800,000}\end{array}$

question 7

Multiple Choice

During 2007, Bond Company purchased the net assets of May Corporation for $950,000.On the date of the transaction, May had $300,000 of liabilities.The fair value of May's assets when acquired were as follows: $\begin{array}{ll}\text { Current assets } & \$ 540,000 \\\text { Noncurrent assets } & {1,260,000}\\&{\$ 1800,000}\end{array}$ How should the $550,000 difference between the fair value of the net assets acquired ($1,500,000) and the cost ($950,000) be accounted for by Bond?

• A)The $550,000 difference should be credited to retained earnings.
• B)The $550,000 difference should be recognized as an extraordinary gain.
• C)The current assets should be recorded at $375,000 and the noncurrent assets should be recorded at $875,000.
• D)A deferred credit of $550,000 should be set up and then amortized to income over a period not to exceed forty years.

Comprehend the various methods used to establish base pay and their implications.

Know the advantages and disadvantages of direct and indirect pay components.

Understand the importance of linking compensation with individual performance and organizational goals.

Recognize the role of benefits as part of the compensation package.

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Definitions:

Environmental Costs

The negative impacts on the environment due to industrial processes, consumption patterns, or other human activities, often quantified in economic terms.

Virgin Materials

Raw materials that have never been processed or used before, often extracted directly from the Earth.

Hazardous Wastes

Hazardous wastes are materials that are dangerous or potentially harmful to people's health or the environment, often requiring special handling and disposal procedures.

Less-Hazardous Substances

Chemicals or materials that pose a lower risk to human health and the environment compared to their more dangerous counterparts.