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:

Substrates

In biochemistry, substrates are the specific substances on which an enzyme acts to catalyze a chemical reaction, often converted into products.

Triglycerides

A type of fat found in your blood, used by the body for energy and considered an important measure of heart health.

Monosaccharides

Simple sugars, such as glucose and fructose, which are basic building blocks of carbohydrates and cannot be hydrolyzed to smaller molecules.

Activation Energy

The minimum amount of energy required to start a chemical reaction.