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

question 100

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 dollar amount of Float Corp.'s net assets that would be represented in a consolidated balance sheet prepared at the date of acquisition?

• A) $1,600,000.
• B) $1,480,000.
• C) $1,200,000.
• D) $1,780,000.
• E) $1,850,000.

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Definitions:

Conglomerate Mergers

The combination of firms operating in unrelated business areas, aiming to diversify product offerings or reduce risk.

HHI

The Herfindahl-Hirschman Index, a measure of market concentration used to evaluate the potential for competitive behavior within an industry.

Beer Industry

A sector of the economy that focuses on producing and selling beer.

HHI

The Herfindahl-Hirschman Index, a measure of market concentration to evaluate the level of competition within an industry.