Use the Following Information to Answer the Question(s) Below -On January 1,2014,assume the Fair Values of Savannah's Identifiable Assets

question 9

Multiple Choice

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

Goldberg Corporation owned a 70% interest in Savannah Corporation on December 31, 2013, and Goldberg's Investment in Savannah account had a balance of $3,900,000. Savannah's stockholders' equity on this date was as follows:
$$\begin{array} { l l } \text { Capital stock, \$10 par value } & \$ 3,000,000 \\\text { Retained Earnings } & \underline { 2,400,000 } \\\text { Total Stockholders' Equity } &\underline { \$ 5,400,000}\end{array}$$
-On January 1,2014,assume the fair values of Savannah's identifiable assets and liabilities equal book values.What is the change in the amount of goodwill associated with the issuance of 80,000 additional shares to Goldberg? (Use four decimal places.)

• A)Increase goodwill $38,176.
• B)Decrease goodwill $38,176.
• C)Increase goodwill $384,000.
• D)Decrease goodwill $384,000.

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Definitions:

Open-Door Policy

A management approach where leaders encourage openness and transparency in the workplace by allowing employees to give feedback, raise concerns, or discuss problems without fear of reprisal.

Alternative Dispute Resolution

A range of procedures, such as mediation or arbitration, designed to resolve disputes without the need for litigation.

Behavioral Modeling

A training technique that involves the imitation of the behavior of others, observing and mapping successful practices and actions to improve performance.

Progressive Discipline

A process by which an employer implements increasingly severe actions (warnings, suspension, termination) in response to employee failures or misconduct.