S08-Additional Problems

S08-Additional Problems - ADDITIONAL PROBLEMS SECTION 8 1....

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ADDITIONAL PROBLEMS SECTION 8
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1. Relco is a high technology company, which, over its 13-year history, has grown rapidly. Relco operates in an industry characterized by heavy expenditures in research and development and products that are regularly updated and revised. Despite aggressive competition, by the end of 2004 its total assets had reached $250 million, revenues had reached $500 million, and net income was $50 million. During the second quarter of 2005, Relco acquired a major division from another company in exchange for $150 million in cash, stock, and debt. The transaction was accounted for as a purchase with $100 million attributed to identifiable assets such as inventory ($30 million) and property, plant, and equipment ($70 million), and the remainder to goodwill. The acquisition represents and effort by Relco to broaden its product line in order to compete more effectively with its main rival in the industry. The acquired division develops and manufacturers a product, Wordup, which, while distinct from Relco’s current offerings, can
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S08-Additional Problems - ADDITIONAL PROBLEMS SECTION 8 1....

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