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anygoal [31]
3 years ago
5

Large purchased all of Small's voting stock for $11 million when Small's total owners' equity was $4 million. The book value and

fair value of Small's liabilities equal $3 million. However, the fair value of Small's total assets equals $9 million. What amount of goodwill is recorded by Large (in millions)
Business
1 answer:
hoa [83]3 years ago
8 0

Answer:

The amount of goodwill that is recorded by Large is $5 million

Explanation:

Goodwill is the excess of price consideration paid to acquire controlling stake in a company over the fair value of the company's net assets.

Net assets in the sense implies the fair value of total assets less fair value of liabilities.

Fair value of total assets is $9 million

Fair value of liabilities    is $3 million

As a result net assets upon acquisition  is $6 million($9 million less $3 million)

Since the consideration paid in acquiring Small's voting stake is $11 million, goodwill is $5 million($11 million less $6 million).

The $ 5 million is the excess of purchase consideration over the fair value of Small's net assets as at the date of acquisition

You might be interested in
Stone Corporation is a manufacturing company that makes small electric motors it sells for $45 per unit. The variable costs of p
Anton [14]

Answer:

40,000 units

Explanation:

Given that,

Selling price per unit = $45 per unit

Variable cost per unit = $25

Fixed cost = $800,000

Contribution margin per unit:

= Selling price per unit - variable cost per unit

= $45 - $25

= $20

Break - Even units:

= Fixed cost ÷ Contribution margin per unit

= $800,000 ÷ $20

= 40,000 units

Therefore, the Break - Even sales in units are 40,000.

5 0
3 years ago
Consider the market demand for peanut butter.Complete the following table by indicating whether an event will cause a movement a
EleoNora [17]

Answer:

A change in the expectations of consumers about prices - a shift of the demand curve for peanut butter

A decrease in the price of peanut butter - a movement along the demand curve for peanut butter

A decrease in the number of consumers - a shift of the demand curve for peanut butter

Explanation:

Only a change in price of a product would lead to a movement along the demand curve for that product.

A decrease in the price of peanut butter would increase the quantity demanded for butter. This would lead to a movement down the demand curve.

A change in the expectations of consumers about prices can shift demand curve either to the left or right.

A decrease in the number of consumers would shift the demand curve to the left.

I hope my answer helps you

8 0
3 years ago
The government provides ______
Harrizon [31]
Unemployment insurance
6 0
3 years ago
A(n) ____ is the transfer of the control of operations and management from one firm to another with the former becoming a unit o
olya-2409 [2.1K]

Answer:

acquisition

Merger

Explanation:

Acquisition is when a company purchases almost all the shares of another company in order to have full control over it. For companies that are distressed or are not able to operate as a going concern, such can put up the company for sale.

In acquisition, the buying company oftentimes retain its name which is already a brand , work and build on the strength of the old company in order to achieve returns. Companies acquire other companies in order to have large market shares and also to diversify their business operation.

One of the benefit of acquisition is that it gives room for fresh ideas due to coming together of different people and also brings people that are experts in their various fields.

Merger is when two or more firms comes together to form a single entity.

Companies or firm merge in order to form an alliance and also send strong signals to other competitors.

Firms also merge in order to increase their financial capacity. This will enable them to be able to finance their business operations. They are also able to increase their asset base as a result of the merger.

4 0
2 years ago
Can a broker arbitrarily penalize an independent contractor based on varying factors, such as the sales agent's difficulty in cl
Irina18 [472]

Answer:

No

Explanation:

An independent contractor is a business person or entity who works for an employer based on an agreed-upon contract which affords him the flexibility of choosing how and when he accomplishes a task. The employer has the right to control the results of his work but has little or no say on how and when the job is done.

An independent contractor is not bound to work specific hours dictated by an employer. When the sale's agent finds it difficult to close a deal or is unable to produce paperwork in a timely fashion, he cannot just be arbitrarily penalized by the broker. The broker could terminate the contract if the agent does not meet up to his requirements.

8 0
2 years ago
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