Posch Company Issued 12,000 Shares of Its $20 Par Value

question 41

Multiple Choice

Posch Company issued 12,000 shares of its $20 par value common stock for the net assets of Sato Company in a business combination under which Sato Company will be merged into Posch Company. On the date of the combination, Posch Company common stock had a fair value of $30 per share. Balance sheets for Posch Company and Sato Company immediately prior to the combination were as follows: If the business combination is treated as an acquisition and Sato Company's net assets have a fair value of $343,200, Posch Company's balance sheet immediately after the combination will include goodwill of:

• A) $15,300.
• B) $19,200.
• C) $16,800.
• D) $28,200.

Determine the impact of production and sales levels on inventory valuation and income under both costing methods.

Analyze the effects of cost behavior patterns on budgeting and financial decision-making.

Understand the concept of gross margin under absorption costing.

Interpret the financial implications of costing choices on business profitability.

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Definitions:

Uncollectible Receivables

Debts owed to a company that are considered to be uncollectable and are written off as a loss.

Debit Balance

Occurs when the total of debits in an account exceeds the total of credits, which can be typical for accounts like expenses, assets, and losses.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collectible.

Allowance for Doubtful Accounts

A contra-asset account that represents the estimated portion of accounts receivable that may not be collectible.