Constant Corp $\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Per Month }$ Assume Revenue and Earnings Remain Same for the Next Year

question 33

Multiple Choice

Constant Corp. bought Steady Company on June 30, 2005 in a pooling-of-interests transaction. Both companies are in stagnant markets. Steady had total assets of $50,000 and total liabilities of $30,000 with fair market values of $60,000 and $30,000, respectively. Constant issued 1,000 shares, valued at $45 per share. Both companies operate in tax-free havens and take a half-year's depreciation in the year acquired using ten-year lives. Monthly operating results are as follows:
$\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Per Month }$
$\begin{array} { | l | r | r | } \hline \text { Sales } & \$ 3,000 & \$ 1,000 \\\hline \text { Expenses } & 2,000 & 800 \\\hline \text { Net income } & \$ 1,000 & \$ 200\\\hline\end{array}$ Assume revenue and earnings remain same for the next year. Company is following SFAS 142.
-If accounted for as a purchase, 2005 consolidated revenues are reported as:

• A) $36,000
• B) $42,000
• C) $48,000
• D) It cannot be determined without further information

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Definitions:

American Renaissance

A period in the mid-19th century characterized by a flourishing of American literature and art, emphasizing themes of national identity and culture.

Transcendentalist Movement

An intellectual movement in the mid-19th century that emphasized individualism, nature, and self-reliance, primarily in the United States.

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An American essayist, lecturer, philosopher, and poet who led the transcendentalist movement of the mid-19th century, advocating for individualism and the inherent goodness of people and nature.

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The prohibition of the manufacture, sale, and consumption of alcoholic beverages, notably practiced in the United States from 1920 to 1933.