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:

Uptake Study

An Uptake Study is a medical test used to assess the functioning of specific organs by measuring the absorption of a radioactive substance.

Radioactive Substance

A material that emits radiation, resulting from the decay of atomic nuclei, used in various medical, industrial, and research applications.

Organ

A part of the body constructed of many types of tissue to perform a function.

Therapeutic Radiation

Used in the treatment of cancer by preventing cellular reproduction.