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Following Are Selected Accounts for Green Corporation and Vega Company

question 48

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Following are selected accounts for Green Corporation and Vega Company as of December 31, 2013. Several of Green's accounts have been omitted.
Following are selected accounts for Green Corporation and Vega Company as of December 31, 2013. Several of Green's accounts have been omitted.   Green acquired 100% of Vega on January 1, 2009, by issuing 10,500 shares of its $10 par value common stock with a fair value of $95 per share. On January 1, 2009, Vega's land was undervalued by $40,000, its buildings were overvalued by $30,000, and equipment was undervalued by $80,000. The buildings have a 20-year life and the equipment has a 10-year life. $50,000 was attributed to an unrecorded trademark with a 16-year remaining life. There was no goodwill associated with this investment. Compute the December 31, 2013, consolidated total expenses.  A)  $620,000. B)  $280,000. C)  $900,000. D)  $909,625. E)  $299,625.
Green acquired 100% of Vega on January 1, 2009, by issuing 10,500 shares of its $10 par value common stock with a fair value of $95 per share. On January 1, 2009, Vega's land was undervalued by $40,000, its buildings were overvalued by $30,000, and equipment was undervalued by $80,000. The buildings have a 20-year life and the equipment has a 10-year life. $50,000 was attributed to an unrecorded trademark with a 16-year remaining life. There was no goodwill associated with this investment.
Compute the December 31, 2013, consolidated total expenses.

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Definitions:

Leverage

Utilizing borrowed capital to amplify the possible gains from an investment.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed on an annual basis.

All Equity

A financing structure where a company's capital structure is composed entirely of equity without any debt.

Repurchase Shares

The action taken by a company to buy back its own shares from the marketplace, reducing the amount of outstanding stock.

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