Quiz_3_Day_KEY - ACC 5110 QUIZ 3 Part I. Choose the best...

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ACC 5110 Winter 2010 QUIZ 3 KEY Part I. Choose the best answer. 1. On June 30, 2008, Hi-Tech Inc. purchased for cash at $50 per share all 150,000 shares of outstanding common stock of Skicraft Company. Skicraft's balance sheet at June 30, 2008, showed net assets with a book value of $6,000,000. The fair value of Skicraft's property, plant, and equipment on June 30, 2008, was $800,000 in excess of its book value. What amount, if any, will be recorded by Hi-Tech as goodwill on the date of purchase? a. $0 b. $700,000 c. $800,000 d. $1,500,000 ($50*150,000) – ($6,000,000 + $800,000) = $700,000 2. Which of the following is correct? a. The fair value of internally generated intangible assets should be estimated and recorded on the books of the entity that developed the assets even in the absence of a business acquisition. b. The fair value of internally generated intangible assets may be estimated but should not be recorded on the books or displayed on the financial statements of the entity. c. Managers may value their own companies and recognize goodwill in the company accounts even though an entity has not been acquired in a business acquisition. d. Goodwill should be recognized in the accounts whenever the value of the firm increases based on current market prices of the firm's common stock. 3. Pastel Co. purchased a patent on January 1, 2005, for $714,000. The patent was being
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Quiz_3_Day_KEY - ACC 5110 QUIZ 3 Part I. Choose the best...

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