ACME Co Paid $110,000 for the Net Assets of Comb Corp

question 21

Multiple Choice

ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: What is the amount of goodwill or gain related to the acquisition?

• A)Goodwill of $70,000
• B)Goodwill of $30,000
• C)A gain of $30,000
• D)A gain of $70,000

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Definitions:

Operational Performance

Evaluation of an organization's effectiveness in producing its goods or services, considering efficiency and productivity.

EBIT

EBIT, an indicator of corporate earnings, captures the profit of a company by including all costs except for those related to interest and taxes.

Income Taxes

Taxes imposed by the government on income generated by businesses and individuals within their jurisdiction.

EBIT

Earnings Before Interest and Taxes - a measure of a firm's profitability that excludes interest and income tax expenses.