DC Company Purchased 100% of the Outstanding Common Shares of FA

question 22

Multiple Choice

DC Company purchased 100% of the outstanding common shares of FA Company on December 31,20X3 for $170,000.At that date,FA had $100,000 of outstanding common stock and retained earnings of $30,000.It was agreed that the net assets were fairly valued except that the fair value of the capital assets exceeded their net book value by $20,000 and the carrying value of the inventory exceeded its fair value by $10,000.The capital assets had a remaining useful life of eight years as of the acquisition date and have no salvage value.Inventory turns over four times a year.It is now 20X6 and DC has been very pleased with how profitable its investment in FA has been.On DC's consolidated financial statements at December 31,20X6,what balance should be reported for goodwill?

• A)$10,000
• B)$30,000
• C)$40,000
• D)$70,000

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Disorders of the nervous system attributable to biological factors, affecting the brain's structure, chemistry, or function.

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The ability of an individual to move and control movements of the body, primarily referring to physical coordination and mobility.

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The ability of the body to receive and process stimuli from the environment through the senses, such as sight, hearing, taste, touch, and smell.

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A physical symptom that is caused by psychological factors and can cause significant distress or impairment.