What Is the Amount of Goodwill Arising from This Acquisition

question 55

Multiple Choice

What is the amount of goodwill arising from this acquisition?

• A) $230.
• B) $120.
• C) $520.
• D) None. There is a gain on bargain purchase of $230.
• E) None. There is a gain on bargain purchase of $265.

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Definitions:

Re-Order Point

The inventory level at which an order should be placed to replenish stock before it runs out, based on lead time and consumption rate.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices at a given time.

Optimal Order Size

The quantity that minimizes the total cost of inventory, including holding and ordering costs.

Annual Inventory Cost

The total cost associated with storing and maintaining a company's inventory over one year, including warehousing and insurance.