REFERENCE: Ref.02_07 Presented Below Are the Financial Balances for the Atwood Company

question 45

Multiple Choice

REFERENCE: Ref.02_07
Presented below are the financial balances for the Atwood Company and the Franz Company as of December 31,2009,immediately before Atwood acquired Franz.Also included are the fair values for Franz Company's net assets at that date.
Note: Parenthesis indicate a credit balance
Assume a business combination took place at December 31,2009.Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz.Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid.Atwood is applying the acquisition method in accounting for Franz.To settle a difference of opinion regarding Franz's fair value,Atwood promises to pay an additional $5.2 (in thousands) to the former owners if Franz's earnings exceed a certain sum during the next year.Given the probability of the required contingency payment and utilizing a 4% discount rate,the expected present value of the contingency is $5 (in thousands) .
-Compute the investment cost at date of acquisition.

• A)$1,760.
• B)$1,755.
• C)$1,750.
• D)$1,765.
• E)$1,120.

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Definitions:

Retarding Spoilage

Methods or techniques used to slow down the deterioration of food or other perishable goods.

Additives

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