REFERENCE: Ref.03_07 Following Are Selected Accounts for Green Corporation and Vega Company

question 17

Multiple Choice

REFERENCE: Ref.03_07
Following are selected accounts for Green Corporation and Vega Company as of December 31,2010.Several of Green's accounts have been omitted.
Green obtained 100% of Vega on January 1,2006,by issuing 10,500 shares of its $10 par value common stock with a fair value of $95 per share.On January 1,2006,Vega's land was undervalued by $40,000,its buildings were overvalued by $30,000,and equipment was undervalued by $80,000.The buildings have a 20-year life and the equipment has a 10-year life.$50,000 was attributed to an unrecorded trademark with a 16-year remaining life.There was no goodwill associated with this investment.
-Compute the book value of Vega at January 1,2006.

• A)$997,500.
• B)$857,500.
• C)$1,200,000.
• D)$1,600,000.
• E)$827,500.

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Definitions:

Projective Tests

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A psychological perspective that emphasizes the role of the unconscious mind, internal conflicts, and past experiences in shaping behavior.

Psychodrama

A therapeutic technique that uses role play and group dynamics to help participants express feelings and gain insight into their lives.

Group Dynamics

The study of the behaviors and psychological processes occurring within a social group or between social groups.