REFERENCE: Ref.02_08 Flynn Acquires 100 Percent of the Outstanding Voting Shares of Shares

question 86

Multiple Choice

REFERENCE: Ref.02_08
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1,20X1.To obtain these shares,Flynn pays $400 (in thousands) and issues 10,000 shares of $20 par value common stock on this date.Flynn's stock had a fair value of $36 per share on that date.Flynn also pays $15 (in thousands) to a local investment firm for arranging the transaction.An additional $10 (in thousands) was paid by Flynn in stock issuance costs.
The book values for both Flynn and Macek as of January 1,20X1 follow.The fair value of each of Flynn and Macek accounts is also included.In addition,Macek holds a fully amortized trademark that still retains a $40 (in thousands) value.The figures below are in thousands.Any related question also is in thousands.
SHAPE \* MERGEFORMAT

-Assuming the combination is accounted for as a purchase,what amount will be reported for goodwill?

• A)$35.
• B)$(5).
• C)$110.
• D)$70.
• E)$150.

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Definitions:

Nodules

In botany, swollen structures on plant roots that house symbiotic bacteria involved in the nitrogen fixation process.

Nitrogen-Fixing Bacteria

Microorganisms that convert atmospheric nitrogen into a form that plants can absorb and utilize, such as ammonia.

Source-To-Sink

A concept describing the movement of materials or energy from a region of production (source) to a region of storage or consumption (sink) in organisms or ecosystems.

Pressure Flow

A hypothesis explaining the process by which sugars are transported in the phloem of plants from sources to sinks.