The Balance Sheet of Mini Company Was as Follows Immediately

question 27

Multiple Choice

The balance sheet of Mini Company was as follows immediately before it was acquired by Maxi Company: On January 1, 2016, in a merger transaction, Maxi Company paid $350,000 in cash for 100% of the outstanding common stock of Mini Company. The fair value of Mini Company's plant and equipment was $140,000 on the date of acquisition. If the fair value and book value are the same for Mini's remaining assets and liabilities, what was the amount of goodwill acquired by Maxi Company?

• A)$20,000.
• B)$40,000.
• C)$50,000.
• D)$60,000.

---

Definitions:

Accounts Receivable Period

The mean duration required by a company to receive payments from clients following a sale transaction.

Payables Period

The average time it takes for a company to pay its invoices from suppliers, indicating the company's payment habits and cash flow management.

Credit Sales

Credit sales are transactions where the customer purchases goods or services on credit, agreeing to pay the supplier at a later date.

COGS

Cost of Goods Sold represents the direct costs associated with the production of the goods sold by a company.