Canto Ltd, a Spanish Corporation, Acquired 100% Interest in Bevo $\begin{array}{ll}\text { Net Assets (Bevo) } & 35,000,000 \\\text { Goodwill } & 15,000,000 \\\text { Cash } &&50,000,000\end{array}$

question 40

Multiple Choice

Canto Ltd, a Spanish corporation, acquired 100% interest in Bevo, Inc., a U.S.corporation for $50,000,000.The net assets of Bevo had a book value of $35,000,000 and a fair value of $56,000,000.How should Canto record the business combination? A.
$\begin{array}{ll}\text { Net Assets (Bevo) } & 35,000,000 \\\text { Goodwill } & 15,000,000 \\\text { Cash } &&50,000,000\end{array}$

B.
$\begin{array}{ll}\text { Net Assets (Bevo) } &56,000,000 \\\text { Goodwill } & &6,000,000 \\\text { Cash } &&50,000,000\end{array}$

C.
$\begin{array}{ll}\text { Net Assets (Bevo) } &50,000,000 \\\text { Cash } &&50,000,000\end{array}$

D.
$\begin{array}{ll}\text { Net Assets (Bevo) } &56,000,000 \\\text { Goodwill } & &6,000,000 \\\text { Cash } &&50,000,000\end{array}$

• A)Entry A
• B)Entry B
• C)Entry C
• D)Entry D

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Definitions:

Breakeven Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for the business.

Total Cost

The complete cost of production or operation, including both fixed and variable costs.

Total Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Odd Pricing

Psychological pricing strategy in which goods are priced at, say, $9.99 rather than $10.00 in the belief that the price will seem lower than it really is.