Use the Following Information to Answer the Question(s) Below -Under the Entity Theory,a Consolidated Balance Sheet Prepared Immediately After

question 16

Multiple Choice

Use the following information to answer the question(s) below.

Pasfield Corporation acquired a 90% interest in Santini Corporation for $90,000 cash on January 1, 2014. The following information is available for Santini at that time
$\begin{array}{lccr}&\text { Book Value}&\text { Fair Value }&\text { Difference }\\\text { Current assets } & \$ 40,000 & \$ 50,000 & \$ 10,000 \\\text { Plant assets } & 60,000 & 75,000 & 15,000 \\\text { Liabilities } & \underline{(50,000) } & \underline{(50,000) } & 0 \\\text { Net assets } & \underline{\underline{\$ 50,000}} & \underline{\underline{\$ 75,000}} &\end{array}$

-Under the entity theory,a consolidated balance sheet prepared immediately after the business combination will show goodwill of

• A)$15,000.
• B)$22,500.
• C)$25,000.
• D)$32,500.

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Definitions:

Planning Fallacy

The tendency to underestimate how much time is needed to complete a task, leading to overly optimistic time estimations.

Optimistic Mindset

A mental attitude characterized by hope and confidence in success and positive outcomes.

Proximal Goals

Short-term objectives or milestones that are set as steps leading towards a longer-term goal.

Distal Goals

Objectives or aims that are set for the long-term future, usually requiring more time and effort to achieve than proximal or immediate goals.