Use the Following Information to Answer the Question(s) Below

question 14

Multiple Choice

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

On January 1, 2014, Pamplin Corporation's stockholders' equity consisted of $1,000,000 of $10 par value Common Stock, $750,000 of Additional Paid-in Capital, and $3,000,000 of Retained Earnings. On January 1, 2014, Pamplin purchased 90% of the outstanding common stock of Sage Corporation for $1,500,000 with all excess purchase cost assigned to goodwill. The stockholders' equity of Sage on this date consisted of $800,000 of $100 par value, 8% cumulative, preferred stock callable at $105, $900,000 of $10 par value common stock and $500,000 of Retained Earnings. Sage's net income for 2014 was $100,000.

On January 1, 2014, no preferred dividends are in arrears. No dividends are declared or paid in 2014. In a separate transaction on January 1, 2014, Pamplin purchased 70% of Sage's preferred stock for $600,000.

-What is the goodwill on the consolidated balance sheet for Pamplin and Subsidiaries on December 31,2014 based on Pamplin's purchase of Sage's common stock?

• A)$140,000
• B)$240,000
• C)$290,000
• D)$306,667

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Definitions:

More Than Two Units

This term is not clearly defined in business or operational contexts and may need more specification for accurate definition. NO.

λ

Lambda (λ) often represents the rate at which events occur in a Poisson distribution or the decay constant in exponential decay models.

M/M/1

A queueing model notation representing a system with a single server, where arrivals follow a Poisson process, and service times are exponentially distributed.

Utilization

The ratio of the time that a resource is actually used to the time it is available for use, often measured to assess efficiency in operations.