Whaley Company Assigned Goodwill of $60,000 to One of the Reporting

question 36

Multiple Choice

Whaley Company assigned goodwill of $60,000 to one of the reporting divisions of Rory company when it initially acquired it. Four years later the following information for this division follows: $\begin{array}{|l|r|r|}\hline&\text { Carrying Amount }&\text { Fair value}\\\hline \text { Cash } & \$ 20,000 & \$ 20,000 \\\hline \text { Inventory } & 35,000 & 40,000 \\\hline \text { Equipment } & 125,000 & 160,000 \\\hline \text { Goodwill } & 60,000 & \\\hline \text { Accounts Payable } & 30,000 & 30,000 \\\hline\end{array}$ Based on the preceding information, what amount of goodwill will be reported for this division if its fair value of the division is now determined to be $200,000?

• A)$0
• B)$60,000
• C)$30,000
• D)$10,000

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Definitions:

Efficient Production

A production process that operates at the lowest possible cost and produces the highest possible output with given resources and technology.

Production Possibility Frontier

A curve depicting the maximum feasible amounts of two goods that can be produced with available resources and technology.

Economic Growth

A growth in an economy's ability to produce goods and services when comparing one time period to another.

Outward Shift

A movement of a curve away from the origin on a graph, typically indicating an increase in supply or demand.