Patel Company Paid $5 Million for 100% of the Voting

question 77

Multiple Choice

Patel Company paid $5 million for 100% of the voting shares of Satel Company.On the date of acquisition the book value of Satel's net assets was $4 million and the fair value was $4.4 million.What would be the value of goodwill reported on the consolidated balance sheet at the date of acquisition?

• A)$0
• B)$400,000
• C)$600,000
• D)$1,000,000

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Definitions:

Gold Jewelry

Ornamental items made of gold, often used as a form of adornment or investment.

Bus Tickets

Physical or electronic documents that allow an individual to travel on a bus for a specific journey.

Inferior Goods

Goods whose demand decreases as the income of the consumers increases, opposite to what is observed with normal goods.

Normal Good

A normal good is a type of good for which demand increases when income increases, and decreases when income decreases, showing a direct relationship between income and demand.