Perch Co Acquired 80% of the Common Stock of Float Corp

question 96

Multiple Choice

Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float's net assets was $1,850,000, and the book value was $1,500,000. The non-controlling interest shares of Float Corp. are not actively traded.
What is the total amount of goodwill recognized at the date of acquisition?

• A) $150,000.
• B) $250,000.
• C) $0.
• D) $120,000.
• E) $170,000.

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Definitions:

Residual Volume

The amount of air remaining in the lungs after a forceful exhalation, ensuring that gas exchange continues even between breaths.

Trachea

The windpipe; a large membranous tube reinforced by rings of cartilage, extending from the larynx to the bronchial tubes and conveying air to and from the lungs.

Windpipe

Another term for the trachea, the large airway that leads from the throat (pharynx) to the lungs, allowing for air passage.

Nasal Cavity

A large air-filled space above and behind the nose in the middle of the face, part of the respiratory system, which filters, warms, and moistens air breathed in through the nose.