Turner,Inc

question 65

Multiple Choice

Turner,Inc. has $4.2 million in net working capital. The firm has fixed assets with a book value of $48.6 million and a market value of $53.4 million. Martin & Sons is buying Turner,Inc. for $60 million in cash. The acquisition will be recorded using the purchase accounting method. What is the amount of goodwill that Martin & Sons will record on its balance sheet as a result of this acquisition?

• A) $0
• B) $2.4 million
• C) $6.6 million
• D) $7.2 million
• E) $11.4 million

---

Definitions:

Safety Stock

Inventory kept on hand to protect against fluctuations in demand or supply, acting as a buffer to prevent stockouts.

Stockout

A situation in inventory management where the demand for an item cannot be fulfilled due to the absence of the item in stock.

Demand Variability

The extent to which the demand for goods or services fluctuates over a certain period.

Safety Stock

Inventory kept on hand as a buffer against variability in demand or supply, to avoid out-of-stock situations.