The Following Information Applies to Questions 32 - 34

question 33

Multiple Choice

The following information applies to Questions 32 - 34
On January 1, 20X2, Ephraim Corporation acquired 80 percent of Lilac Corporation for $200,000 cash. Lilac reported net income of $25,000 each year and dividends of $5,000 each year for 20X2, 20X3, and 20X4. On January 1, 20X2, Lilac reported common stock outstanding of $160,000 and retained earnings of $40,000, and the fair value of the noncontrolling interest was $50,000. It held land with a book value of $90,000 and a market value of $100,000, and equipment with a book value of $40,000 and a market value of $48,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of eight years. All depreciable assets held by Lilac at the date of acquisition had a remaining economic life of eight years. Ephraim uses the equity method in accounting for its investment in Lilac.
-Based on the preceding information,the increase in the fair value of patents held by Lilac is

• A) $10,000
• B) $18,000
• C) $32,000
• D) $50,000

---

Definitions:

Stereotactic Radiosurgery

A non-surgical radiation therapy used to treat abnormalities and small tumors in the brain with highly focused radiation beams.

Cancer

A broad group of diseases characterized by the uncontrolled growth and spread of abnormal cells.

Cellular Reproduction

The process by which cells divide to form new cells, essential for growth, repair, and the maintenance of organisms.

Myelography

A radiographic examination of the spinal canal after injecting a contrast medium to detect spinal cord or nerve root disorders.