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

question 20

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 gain or loss on disposal of business should Comb Corp. recognize?

• A)Gain of $60,000
• B)Gain of $60,000.
• C)Loss of $30,000
• D)Loss of $60,000

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Definitions:

Price Searchers

Firms or individuals who determine their selling price based on the demand and supply conditions of the market, rather than being price takers.

Downward-sloping Demand

Refers to the economic principle that, all else being equal, as the price of a good or service decreases, the quantity demanded increases.

Inelastic Demand

A condition in market dynamics where the demand for a product does not significantly change with a change in the product's price.

Competitive Price-searcher

An economic term for a seller that sets its product prices based on what competitors are charging, within a competitive market environment.