Strong Company Has Had Poor Operating Results in Recent Years

question 24

Multiple Choice

Strong Company has had poor operating results in recent years and has a $160,000 net operating loss carry-forward. Leader Corp. pays $700,000 to acquire Strong and is optimistic about its future profitability potential. The book value and fair value of Strong's identifiable net assets is $500,000 at date of acquisition. Strong's tax rate is 30% and Leader's tax rate is 40%. What is goodwill resulting from this business combination?

• A) $40,000.
• B) $88,000.
• C) $104,000.
• D) $152,000.
• E) $248,000.

---

Definitions:

Heart Rate

The number of times the heart beats per minute, which can vary according to the body's physical needs, including the demand for oxygen.

Controlled Breathing

A technique that involves consciously regulating one's breathing pattern to improve physical or mental well-being.

Biofeedback

A technique that teaches individuals to control physiological functions by using signals from their own bodies.

Qui Gong

A traditional Chinese mind-body practice that combines movement, meditation, and regulated breathing to enhance physical and mental health.