During 2017, Spokane Ltd

question 47

Multiple Choice

During 2017, Spokane Ltd.purchased the net assets of Tacoma Corp.for $635,000.On the date of the transaction, Tacoma reported $200,000 in liabilities.As well, the fair value of Tacoma's assets were: How should the difference between the fair value of the net assets acquired and the cost be accounted for by Spokane?

• A)The difference should be credited to retained earnings.
• B)The difference should be recognized as a gain in net income.
• C)The noncurrent assets should be reduced appropriately.
• D)The difference should be prorated between the current and the noncurrent assets.

Comprehend the double-entry accounting system and the requirements for transaction balances.

Understand the purpose and preparation of a trial balance.

Identify the normal balance for different types of accounts.

Recognize the process for analyzing and recording transactions.

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