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

question 33

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 fair value over book value differences attributed to Perch at the date of acquisition?

• A) $120,000.
• B) $150,000.
• C) $280,000.
• D) $350,000.
• E) $370,000.

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Definitions:

Fair Value

An estimate of the market value of an asset, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a seller.

Boot

Additional value or cash given along with a trade or exchange to equalize the value between traded items.

Plant Site

The location or real estate used for industrial or manufacturing operations.

Nominal Cost

A term often used to describe a cost that is very small or insignificant in comparison to the overall financial figures involved.