Pagach Company Purchased 100% of the Voting Common Stock of Rage

question 20

Multiple Choice

Pagach Company purchased 100% of the voting common stock of Rage Company for $1,800,000.The following book and fair values are available:
$\begin{array}{lrr}& \text { Book Value } & \text { Fair Value } \\\text { Current assets } & \$ 150,000 & \$ 300,000 \\\text { Land and building } & 280,000 & 280,000 \\\text { Machinery } & 400,000 & 700,000 \\\text { Bonds payable } & (300,000) & (250,000) \\\text { Goodwill } & 150,000 & ?\end{array}$
The bonds payable will appear on the consolidated balance sheet

• A)at $300,000 (with no premium or discount shown).
• B)at $300,000 less a discount of $50,000.
• C)at $0; assets are recorded net of liabilities.
• D)at an amount less than $250,000 since it is a bargain purchase.

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