IOU Inc Purchased All of the Outstanding Common Shares of UNI

question 5

Multiple Choice

IOU Inc. purchased all of the outstanding common shares of UNI Inc. for $800,000. On the date of acquisition, UNI's assets included $2,000,000 of Inventory and Land with a Book value of $120,000.UNI also had $1,400,000 in Liabilities on that date. UNI's book values were equal to their fair market values, with the exception of the company's Land, which was estimated to have a fair market value which was $50,000 higher than its book value. How much goodwill would be created by IOU's acquisition of UNI?

• A) $30,000.
• B) $50,000.
• C) $80,000.
• D) Nil.

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Definitions:

Implicit Assumption

An underlying belief or principle that is accepted without question or evidence.

Hostile Attribution Bias

A cognitive bias leading individuals to interpret others' intentions as malevolent, often in ambiguous situations.

Expressions of Hostility

Behaviors or gestures that convey anger, aggression, or opposition towards others.

Potency Bias

A cognitive bias that leads individuals to overestimate their ability, power, or the effectiveness of their actions.