The Financial Statements for Goodwin, Inc On December 31, 2013, Goodwin Issued $600 in Debt and the Year

question 112

Multiple Choice

The financial statements for Goodwin, Inc. and Corr Company for the year ended December 31, 2013, prior to Goodwin's acquisition business combination transaction regarding Corr, follow (in thousands) : $\begin{array}{lrr}&\text { Goodwin } &\text { Corr }\\\text { Revenues } & \$ 2,700 & \$ 600 \\\text { Expenses } & \underline{1.980} & \underline{400} \\\text { Net income } & \$ 720 & \$ 200\\\\\text { Retained earnings } 1 / 1 & \$ 2,400 & \$ 400 \\\text { Net income } & 720 & 200 \\\text { Dividends } & (270) & (0) \\\text { Retained earnings, } 12 / 31&\$2,850&\$600\\\\\text { Cash } & {\$ 240} & \$ 220 \\\text { Receivables and inventory } & 1,200 & 340 \\\text { Buildings (net) } & 2,700 & 600 \\\text { Equipment (net) } & \underline{2,100} & \underline{1,200} \\\quad \text { Total assets } & \${\underline{\underline{6,240}}} & \$ \underline{\underline{2,360}}\\\\\text { Liabilities } & \$ 1,500 & \$ 820 \\\text { Common stock } & 1,080 & 400 \\\text { Additional paid-in capital } & 810 & 540 \\\text { Retained earnings } & 2,850 & 600 \\\quad \text { Total liabilities \& stockholders' equity } & \$ \underline{6,240} & \$ {\underline{6,360}}\end{array}$ On December 31, 2013, Goodwin issued $600 in debt and 30 shares of its $10 par value common stock to the owners of Corr to acquire all of the outstanding shares of that company. Goodwin shares had a fair value of $40 per share. Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock issuance costs. Corr's equipment was actually worth $1,400 but its buildings were only valued at $560.
In this acquisition business combination, at what amount is the investment recorded on Goodwin's books?

• A)$1,540.
• B)$1,800.
• C)$1,860.
• D)$1,825.
• E)$1,625.

---

Definitions:

Hypokalemia

A medical condition characterized by low levels of potassium in the bloodstream.

Volume-Control Device

A device that regulates the volume of sound emitted by electronic equipment or the flow of liquid or gas.

Kanamycin

An antibiotic used to treat a variety of bacterial infections by inhibiting the production of bacterial proteins.

IV Stat

An order for immediate intravenous administration of a medication, typically in emergency situations.