Following Are Selected Accounts for Green Corporation and Vega Company

question 74

Multiple Choice

Following are selected accounts for Green Corporation and Vega Company as of December 31, 2015. Several of Green's accounts have been omitted. Green acquired 100% of Vega on January 1, 2011, by issuing 10,500 shares of its $10 par value common stock with a fair value of $95 per share. On January 1, 2011, 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 book value of Vega at January 1, 2011.

• A) $997,500.
• B) $857,500.
• C) $1,200,000.
• D) $1,600,000.
• E) $827,500.

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Definitions:

Ministroke

Also known as a Transient Ischemic Attack (TIA), it refers to a brief interruption of blood supply to part of the brain, causing temporary stroke-like symptoms.

Brain Attack

Another term for a stroke, a medical condition where poor blood flow to the brain results in cell death, causing loss of muscle control, speech, or other functions.

Nonbarbiturate Sedative

A class of sedatives that induce sleep and reduce anxiety without the use of barbiturates, which have a different chemical structure.

Tylenol

A brand name for acetaminophen, a medication used to reduce pain and fever.