The Financial Statements for Campbell, Inc

question 96

Multiple Choice

The financial statements for Campbell, Inc., and Newton Company for the year ended December 31, 2021, prior to the business combination whereby Campbell acquired Newton, are as follows (in thousands) : On December 31, 2021, Campbell obtained a loan for $650 and used the proceeds, along with the transfer of 35 shares of its $10 par value common stock, in exchange for all of Newton's common stock. At the time of the transaction, Campbell's common stock had a fair value of $40 per share.In connection with the business combination, Campbell paid $25 to a broker for arranging the transaction and $30 in stock issuance costs. At the time of the transaction, Newton's equipment was actually worth $1,450 but its buildings were only valued at $590.Assuming that Newton retains a separate corporate existence after this acquisition, at what amount is the investment recorded on Campbell's books?

• A)$1,000.
• B)$1,055.
• C)$1,995.
• D)$2,050.
• E)$2,105.

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Definitions:

DDT

Dichloro-Diphenyl-Trichloroethane, a synthetic insecticide used historically for malaria and pest control, now banned in many countries due to environmental impact.

Nitrogen Cycle

A biogeochemical cycle that describes the transformations of nitrogen and nitrogen-containing compounds in nature.

Nitrogen Fixation

The process by which nitrogen gas from the atmosphere is converted into ammonia by certain bacteria, making nitrogen available to living organisms.

Denitrification

A microbial process occurring mostly in soil and aquatic environments, where nitrate is reduced and ultimately produces molecular nitrogen, removing it from the ecosystem.