Fredericks Limited Acquired the Identifiable Assets,liabilities and Contingent Liabilities of Nicole

question 15

Multiple Choice

Fredericks Limited acquired the identifiable assets,liabilities and contingent liabilities of Nicole Limited for $134 000.The items acquired,stated at fair value,are: Plant $72 000 Inventory $40 000 Accounts receivable $18 000 Patents $10 000 Accounts payable $16 000.The difference on acquisition is:

• A)Gain on bargain purchase $10 000
• B)Gain on bargain purchase $16 000
• C)Goodwill of $10 000
• D)Goodwill of $124 000.

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Definitions:

Probability Ranges

A statistical measure that estimates the range within which the value of a variable or outcome will fall, given a certain level of confidence.

Normal Distribution

A symmetric, bell-shaped frequency distribution that can be defined by its mean and standard deviation.

Percentage Return

The profit or deficit achieved on an investment over a designated duration, measured as a percentage of the investment’s initial value.

Bond

A fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a variable or fixed interest rate.