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 64

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 earnings are reported as

• A) $10,700
• B) $11,900
• C) $12,700
• D) $13,200

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Definitions:

Survival Functions

Mathematical functions used in statistics to estimate the likelihood that a subject will survive past a certain time.

Association Areas

Regions of the cerebral cortex that integrate information from various sensory inputs for complex processes like thinking, learning, and memory.

Frontal Lobes

The front part of the brain's cerebral hemispheres, involved in decision making, problem solving, control of purposeful behaviors, consciousness, and emotions.

Complexity

The state or quality of being intricate or complicated, often referring to systems with multiple interrelated components.