REFERENCE: Ref.10_10 Kennedy Company Acquired All of the Outstanding Common Stock of Stock

question 22

Multiple Choice

REFERENCE: Ref.10_10
Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for US$350,000 on January 1,2009,when the exchange rate for the Canadian dollar was US$.70.The fair value of the net assets of Hastie was equal to their book value of C$450,000 (Canadian dollars) on the date of acquisition.Any excess cost over fair value was attributed to an unrecorded patent with a remaining life of five years.The functional currency of Hastie is the Canadian dollar.
For the year ended December 31,2009,Hastie's translated net income was $25,000.The average exchange rate for the Canadian dollar during 2009 was US$.68,and the 2009 year-end exchange rate was US$.65.
-Calculate the US$ amount allocated to the patent at January 1,2009.

• A)$50,000.
• B)$35,000.
• C)$34,000.
• D)$32,500.
• E)$28,200.

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Definitions:

Fe

Symbol for Iron, a chemical element with atomic number 26, known for its strength and magnetic properties.

Electrons

Negatively charged subatomic particles orbiting the nucleus of an atom involved in chemical bonds and electrical conduction.

Atom

The smallest unit of ordinary matter that forms a chemical element, consisting of a nucleus surrounded by electrons.

Co

Co is the chemical symbol for cobalt, a naturally occurring element with atomic number 27, known for its magnetic properties and use in alloys.