Utah IncAcquired All of the Outstanding Common Stock of Trimmer Corp

question 48

Essay

Utah Inc.acquired all of the outstanding common stock of Trimmer Corp.on January 1,2009.At that date,Trimmer owned only three assets and had no liabilities:
$\begin{array} { l r r } & \begin{array} { r } \text { Book } \\\underline{\text { Value }}\end{array} & \begin{array} { r } \text { Fair } \\\underline{\text { Value }}\end{array} \\\text { Inventory } & \$ 36,000 & \$ 48,000 \\\text { Equipment (5-year life) } & 84,000 & 60,000 \\\text { Building (10-year life) } & 120,000 & 180,000\end{array}$
-If Utah paid $300,000 in cash for Trimmer,what allocation should have been assigned to the subsidiary's Building account and its Equipment account in a December 31,2011 consolidation?
Since Utah paid more than the $288,000 fair value of Trimmer's net assets,all allocations are based on fair value with the excess $12,000 assigned to goodwill.

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Definitions:

Sensitive

Quick to detect or respond to slight changes, signals, or influences.

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, often used in finance to represent the volatility of an investment.

Correlation

A numeric value showing how much two or more variables change in connection with one another.

Beta

A rephrased definition: A statistical measure reflecting the relationship between the stock price movements of an individual company and those of the entire market.