On December 31,20X9,Pluto Company Acquired 100 Percent of Saturn Corporation's

question 57

Multiple Choice

On December 31,20X9,Pluto Company acquired 100 percent of Saturn Corporation's common stock for $300,000.Balance sheet information for Saturn just prior to the acquisition is given here:
At the date of the business combination,Saturn's net assets and liabilities approximated fair value except for inventory,which had a fair value of $60,000,land which had a fair value of $125,000,and buildings and equipment (net) ,which had a fair value of $250,000.
-Based on the information provided,what amount of goodwill will be included in the consolidated balance sheet immediately following the acquisition?

• A)$30,000
• B)$15,000
• C)$85,000
• D)$45,000

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Definitions:

Holding Cost

Refers to the costs related to retaining inventory, encompassing expenses such as storage, depreciation, and opportunity costs.

Replenishment Order

An order placed to restock inventory or supplies to ensure sufficient levels are maintained to meet anticipated demand.

Trade Promotion

Marketing activities executed to increase product demand among wholesaler, retailer, or distributor levels.

Fixed Cost

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance.