Xtra Company Purchased a Business from Argus for $96,000 Above

question 27

Multiple Choice

Xtra Company purchased a business from Argus for $96,000 above the fair value of its net assets. Argus had developed the goodwill over 12 years. How much would Xtra amortize the goodwill for its first year?

• A) $7,000
• B) $8,000
• C) goodwill is not amortized
• D) not enough information to calculate amortization

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Definitions:

Trade Show

An event where businesses in a specific industry showcase and demonstrate their new products and services to potential customers.

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products, typically categorized into four Ps: Product, Price, Place, and Promotion.

Technology Use

The use of scientific understanding in practical applications, particularly within industry and daily activities.

Sales

The exchange of a commodity or service for money; the action of selling something.