Prior to Being United in a Business Combination, Taunton Inc

question 2

Multiple Choice

Prior to being united in a business combination, Taunton Inc. and Eubanks Corp. had the following stockholders' equity figures: Taunton issued 62,000 new shares of its common stock valued at $2.75 per share for all of the outstanding stock of Eubanks.Assume that Taunton acquired Eubanks on January 1, 2020 and that Eubanks maintains a separate corporate existence. At what amount did Taunton record the investment in Eubanks?

• A)$62,000.
• B)$108,000.
• C)$170,500.
• D)$201,500.
• E)$234,000.

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Definitions:

Recoverable Amount

The higher value between an asset's fair value minus costs of disposal and its value in use.

Carrying Amount

The amount at which an asset or liability is recognized on the balance sheet after deducting any accumulated depreciation, amortization, or impairment.

Fair Value

An estimate of the price at which an asset or liability would be traded between knowledgeable, willing parties in an arm's length transaction.

Costs To Sell

The direct costs attributable to the disposition of an asset, excluding finance costs and income taxes.