Bullen Inc Assume That Bullen Issued 12,000 Shares of Common Stock with Vicker

question 104

Multiple Choice

Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 2013. The book value and fair value of Vicker's accounts on that date (prior to creating the combination) follow, along with the book value of Bullen's accounts: $\begin{array}{lrrr}&\text { Bullen } & \text { Vicker } & \text { Vicker } \\&\text { Book } & \text { Book } & \text { Fair } \\&\text { Value } & \text { Value } & \text { Value }\\\hline\text { Retained earnings, 1/1/15 } & \mathbf{\$ 2 5 0 , 0 0 0} & \mathbf{\$ 2 4 0 , 0 0 0} & \\\text { Cash and receivables } & 170,000 & 70,000 & \mathbf{\$ 7 0 , 0 0 0} \\\text { Inventory } & 230,000 & 170,000 & 210,000 \\\text { Land } & 280,000 & 220,000 & 240,000\\\text { Buildings (net) } & 480,000 & 240,000 & 270,000 \\\text { Equipment (net) } & 120,000 & 90,000 & 90,000 \\\text { Liabilities } & 650,000 & 430,000 & 420,000 \\\text { Common stock } & 360,000 & 80,000 & \\\text { Additional paid-in capital } & 20,000 & 40,000 &\end{array}$ Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $47 fair value to obtain all of Vicker's outstanding stock. In this acquisition transaction, how much goodwill should be recognized?

• A)$144,000.
• B)$104,000.
• C)$64,000.
• D)$60,000.
• E)$0.

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Definitions:

Negotiations

The process of discussing and arriving at a mutual agreement between parties with differing interests.

Major Purchase

A significant financial investment in a high-value item, such as a house, car, or expensive piece of equipment, that often requires careful planning.

Manufacturing Process

The series of operations involved in the production of goods, which may encompass various methods of transforming raw materials into finished products.

Perpetual Inventory Systems

are accounting methods where inventory records are updated immediately whenever a transaction happens, providing real-time inventory levels.