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

question 8

Multiple Choice

Use the following information to answer the question(s) below.
Goldberg Corporation owned a 70% interest in Savannah Corporation on December 31,2010,and Goldberg's Investment in Savannah account had a balance of $3,900,000.Savannah's stockholders' equity on this date was as follows:
On January 1,2011,Savannah issues 80,000 new shares of common stock to Goldberg for $16 each.
-On January 1,2011,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:

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, that is, the consumer has no preference for one combination over another.

Price Decrease

A reduction in the price of a good or service, which can lead to an increase in quantity demanded by consumers according to the law of demand.

Indifference Curves

Graphical representations used in microeconomics to show different combinations of two goods or services among which a consumer is indifferent, indicating the same level of satisfaction or utility for each combination.

Optimal Consumption

The point at which a consumer maximizes his or her satisfaction or utility from the consumption of goods and services, given a budget constraint.