Mercury Corporation Acquired 100 Percent of the Stock of Jupiter

question 13

Multiple Choice

Mercury Corporation acquired 100 percent of the stock of Jupiter Company when the book value of Jupiter's net assets was $250,000.The fair value of Jupiter's net assets was $280,000 on the acquisition date.
-Based on the preceding information,what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Mercury paid $295,000 for the acquisition?

• A)$0
• B)$5,000
• C)$15,000
• D)$45,000

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogenous product, perfect information, and no barriers to entry or exit.

Marginal Cost

A rise in the comprehensive cost when producing an additional unit of a product or service.

Fixed Cost

A charge that stays the same, no matter how much is produced or sold in terms of goods or services.

Variable Costs

Expenses that vary directly with the level of production or volume of output.