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

question 61

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.
-Compute the amount of the patent reported on the consolidated balance sheet at December 31,2009.

• A)$28,200.
• B)428,000.
• C)$35,000.
• D)$27,200.
• E)$26,000.

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Definitions:

Lose-Lose Strategy

A strategy in which everyone gives up something, and the focus is on compromise.

Compromise

An agreement or settlement of a dispute that is reached by each side making concessions.

Industrial Economy

A system characterized by large-scale, automated manufacturing, capital-intensive production, and the significant role of the industry sector in economic activities.

Service-Dominated Economy

An economy primarily focused on the provision of services rather than goods production.