Parent and Sub Inc On January 1, 2020, Parent Purchased All of Sub Inc

question 30

Multiple Choice

Parent and Sub Inc. had the following balance sheets on December 31, 2019: $\begin{array}{|l|r|r|}\hline & \text { Parent } & \text { Sub } \\\hline \text { Current Assets } & \$ 60,000 & \$ 10,000 \\\hline \text { Fixed Assets (net) } & \$ 100,000 & \$ 60,000 \\\hline \text { Total Assets } & \$ 160,000 & \$ 70,000 \\\hline \text { Current Liabilities } & \$ 42,000 & \$ 35,000 \\\hline \text { Bonds Payable } & \$ 20,000 & \$ 12,000 \\\hline \text { Common Shares } & \$ 90,000 & \$ 12,000 \\\hline \text { Retained Earnings } & \$ 8,000 & \$ 11,000 \\\hline \text { Total Liabilities and Equity } & \$ 160,000 & \$ 70,000 \\\hline\end{array}$ On January 1, 2020, Parent purchased all of Sub Inc.'s Common Shares for $40,000 in cash. On that date, Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000, respectively. Assuming that Consolidated Financial Statements were prepared on that date, answer the following:
The Goodwill arising from this Business Combination would be:

• A) ($17,000)
• B) $120,000
• C) $17,000
• D) $7,000

---

Definitions:

Sharpen/Soften

Techniques used in image processing to enhance details (sharpen) or reduce noise and smooth out features (soften).

Artistic Effects

Digital filters or enhancements applied to images or graphics in software applications to create visual effects or to mimic traditional artistic styles.

Picture

A visual representation or image captured by a camera, painted, drawn, or otherwise produced, which can be digital or physical.

Picture Layout

The arrangement or organization of images within a document, presentation, or webpage, often involving the size, placement, and framing of pictures.