On January 2, 20X8, Johnson Company Acquired a 100% Interest

question 45

Multiple Choice

On January 2, 20X8, Johnson Company acquired a 100% interest in the capital stock of Perth Company for $3,100,000. Any excess cost over book value is attributable to a patent with a 10-year remaining life. At the date of acquisition, Perth's balance sheet contained the following information:
Perth's income statement for 20X8 is as follows:
The balance sheet of Perth at December 31, 20X8, is as follows:
Perth declared and paid a dividend of 20,000 FCU on October 1, 20X8. Spot rates at various dates for 20X8 follow:
Assume Perth's revenues, purchases, operating expenses, depreciation expense, and income taxes were incurred evenly throughout 20X8.

-Refer to the above information.Assuming the U.S.dollar is the functional currency,what is Johnson's remeasurement gain (loss) for 20X8? (Assume the ending inventory was acquired on December 31,20X8.)

• A) $31,000 gain
• B) $36,500 loss
• C) $22,000 gain
• D) $32,000 gain

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Definitions:

Profitability

A measure of the efficiency and financial performance of a company, often assessed by the ratio of its profits to its revenues.

Generic Strategy

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A pricing strategy where a company sets its product prices based on the prices of competitors, aiming to offer more value or lower costs.

Differentiation

A marketing strategy that involves making a product or service stand out from competitors by emphasizing its unique features or benefits.