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Exam1_ solutions

What is the primary accounting difference between

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20. What is the primary accounting difference between accounting for when the subsidiary is dissolved and when the subsidiary retains its incorporation? A. If the subsidiary is dissolved, it will not be operated as a separate division B. If the subsidiary is dissolved, assets and liabilities are consolidated at their book values C. If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition D. If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values E. If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company 21. A statutory merger is a(n) Use the following to answer Questions 22 and 32: The financial statements for Goodwin, Inc. and Corr Company for the year ended December 31, 20X1, prior to Goodwin's business combination transaction regarding Corr, follow (in thousands):
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On December 31, 20X1, Goodwin issued $600 in debt and 30 shares of its $10 par value common stock to the owners of Corr to purchase all of the outstanding shares of that company. Goodwin shares had a fair value of $40 per share. Goodwin paid $25 to a broker for arranging the transaction. Goodwin paid $35 in stock issuance costs. Corr's equipment was actually worth $1,400 but its buildings were only valued at $560. 22. If the combination is accounted for as a purchase, at what amount is the investment recorded on Goodwin's books? 23. If the combination is accounted for as an acquisition, at what amount is the investment recorded on Goodwin's books? 24. Compute the consolidated revenues for 20X1. A. $2,700 B. $720 C. $920 D. $3,300 E. $1,540 25. Assuming the combination is accounted for as a purchase, compute the consolidated expenses for 20X1. 26. Assuming the combination is accounted for as an acquisition, compute the consolidated expenses for 20X1.
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27. Compute the consolidated equipment (net) account at December 31, 20X1. 28. Assuming the combination is accounted for as a purchase, compute the consolidated goodwill account at December 31, 20X1. A. $0 B. $100 C. $125 D. $160 E. $45 29. Assuming the combination is accounted for as an acquisition, compute the consolidated goodwill account at December 31, 20X1.
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