As a person consumes additional units of a good, eventually the utility from each additional unit of the good decreases. Disneyland can’t charge as high a price when utility is low as when it is high.
Answer:
The correct option is A, direct finance lease
Explanation:
The lease is a direct finance lease because the lease period is a substantial part of the asset's useful life.
Also, the cost of maintaining the asset is borne by the lessee, hence, the risk and reward of ownership have been transferred to the lessee.
In this case, the lessee would record the present value of the lease payments as right of use asset
Complete question:
A company pays $70 million in cash to acquire 70% of the voting stock of another company. The fair value of the non controlling interest at the date of acquisition is $25 million, and the book value of the acquired company is $20 million. There are no revaluations of the acquired company’s identifiable net assets. Goodwill allocated to the non-controlling interest is:
REQUIRED: Assuming U.S. GAAP is used.
a. Calculate the total goodwill
b. How much goodwill is allocated to the controlling interest? What percent of goodwill is allocated to the controlling interest?
c. How much goodwill is allocated to the non-controlling interest? What percent of goodwill is allocated to the non-controlling interest?
Solution:
a. Total goodwill = $70 million + $25 million - $20 million = $75 million
b. Goodwill to the controlling interest = $70 million - (70% x $20 million)
= $56 million Goodwill percent to the controlling interest = 75%
c. Goodwill to the non-controlling interest = $75 million - $56 million
= $19 million Goodwill percent to the non-controlling interest = 25%
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