Answer:
C. $17.25 million
Explanation:
In case of an acquisition, the assets are valued at their fair value and we will also include all unrecorded liabilities. Goodwill will be the excess payment over the net assets of the company. Excess fair value of land means that assets would increase by that amount to arrive at their fair value. Also, We have to include unrecorded liabilities in the total liabilities
Net Assets = Fair value of assets - Total liabilities
Or, Net Assets = (Book value of assets + Excess Fair value of land) - (Book value of liabilities + unrecorded liabilities)
Or, Net Assets = ($261 million + $3 million) - ($172.50 million + $6.75 million) = $84.75 million
Amount paid to acquire = $102 million
Goodwill = $102 million - $84.75 million = $17.25 million
The equity theory is a theory that is based on one's idea of fairness. One is motivated if he or she feels equity, but when chances that inequity arises, he or she will try to adjust in order to achieve that sense of equity. In the given statements above, the one that accurately describes this theory is the last statement.
Answer:
In the late 1960s and early 1970s, a small group of Chilean students went to the University of Chicago to obtain graduate degrees in economics. By that time, the University of Chicago was led by Milton Friedman, an economist known for his defense of market liberalism and private property.
After Chilean Dictator Augusto Pinochet overthrew former president Salvador Allende (who killed himself), Pinochet called upon some of these Chicago-graduates to advise him on economic matteers. This lead to the implementation of liberal policies such as privatization of public services, pensions, and healthcare, the reduction of taxes, and the elimination of syndicates.
Answer:
Option (B) is correct.
Explanation:
There is a positive relationship between the inflation rate and the nominal interest rate. When there is an increase in the inflation rate then as a result nominal interest rate also increases at a same rate. This means that people desire to hold less money because of higher nominal interest rate.
Suppose that nominal interest on a savings account is at 5% and inflation rate is at 3% then this means that money in the savings account grows at a 2% and this 2% is a real interest rate.
Answer:
The correct answer is In the owners' equity section.
Explanation:
There are two theories to support the methods of integrating financial statements, namely: the theory of the entity and the theory of property.
Entity Theory: This theory is based on the assumption that the consolidated financial statements make sense when it is determined that there is an expanded economic entity in which the shareholders that make up the non-controlling interest also own a portion of the net assets of the consolidated entity (Carvalho, 2006).
In the attempt to eliminate the capital with which the subsidiaries participate in the consolidation, an account of a creditor nature must arise that reflects that part of the assets and liabilities that are not under the control of the holder. In the financial reporting standards, this portion has been called as a Non-controlling Participation, in exchange for its classic Minority Interest name.
Property Theory: This theory assumes that the owners of the parent or controlling entity are interested in making decisions based on the consolidated financial statements referring only to the part of the subsidiaries over which control is had and therefore, it would be undesirable to include in the consolidated information corresponding to third parties. That is, minority interest does not arise in this situation since the third-party owners of the subordinate have no participation in the parent company (Carvalho, 2006). In international financial information standards, this theory is still valid for those cases related to joint control investments in which there are two shareholders and each one has 50% of the entity to be consolidated. (Martínez, 2010).