Snowflake Corp -Based on the Information Concerning Snowflake Corp

question 21

Multiple Choice

Snowflake Corp.
Penguin, Inc.acquires 100% of the outstanding shares of Snowflake Corp.for $2,250,000 and accounts for the transaction using the purchase method.Snowflake's balance sheet at the acquisition date is as follows:

Snowflake, Corp.
Balance Sheet
Acquisition Date
$\begin{array}{lrr} & \begin{array}{r}\text { Historical } \\ \text { Cost }\end{array} & \begin{array}{r}\text { Current } \\ \text { Market } \\ \text { Value }\end{array} \\ \text { Assets } & \$ 900,000 & \$ 900,000 \\ \text { Current Assets } & \$ 875,000 & \$ 1,250,000 \\ \text { Depreciable Assets less Accumulated Depreciation } & & \\ \text { Goodwill } & \$ 1,775,000 & \\ \text { Total Assets } & & \\ \text { Liabilities and Equities } & & \\ \text { Liabilities } & \$ 1,100,000 & \$ 1,100,000 \\ \text { Deferred Income Tax Liability } & \$ 125,000 & \$ 125,000 \\ \text { Shareholders' Equity } & \$ 550,000 & \\ \text { Total Liabilities and Equities } & \$ 1,775,000 & \end{array}$


-Based on the information concerning Snowflake Corp.what is the value of the goodwill related to the acquisition?

• A) $1,775,000
• B) $475,000
• C) $2,250,000
• D) $1,325,000

---

Definitions:

Reality and Pretending

The distinction between what is actually happening in the world and imaginations or simulations of situations, often explored in the context of child development and psychology.

Overregularization

The act of inappropriately applying the grammatical rules for forming plurals and past tenses to irregular nouns and verbs.

Grammar

The system and structure of a language, including syntax, morphology, and phonology, governing the composition of phrases, clauses, and words.

Object Permanence

The understanding that objects continue to exist even when they cannot be observed (seen, heard, touched, smelled, or sensed in any way).