Multiple Choice Questions
1. PR recognizes previously unrecorded intangibles of
a. $ 1,000
b. $ 5,000
c. $13,000
d. $15,000
2. PR credits capital stock in the amount of
a. $40,000
b. $50,000
c. $39,600
d. $39,200
3. PR records expenses of
a. $ 0
b. $200
c. $400
d. $600
4. Three months after the acquisition, a fire damages SX's equipment, reducing its fair value from $6,000 to $4,000. How does PR report this event?
a. Loss of $2,000, reported on the income statement
b. $2,000 increase in goodwill
c. $2,000 decrease in goodwill
d. Not reported
Use the following information to answer questions l - 7 below. All amounts are in thousands.
PR Company pays $10,000 in cash and issues no-par stock with a fair value of $40,000 to acquire all of SX Corporation's net assets. SX's balance sheet at the date of acquisition is as follows:

PR's consultants find these items that are not reported on SX's balance sheet:
Fair value
Potential contracts with new customers $8,000
Advanced production technology 4,000
Future cost savings 2,000
Customer lists 1,000
Outside consultants are paid $200 in cash, and registration fees to issue PR's new stock are $400. All questions below relate to the entry or entries PR makes to record the acquisition on its books.

Transcribed Image Text:

SX Corporation Book value Fair value 4,200 6,000 14,000 Current assets... 10,000 4,000 Total assets. RROARAA..WE $16,000 $2,000 11,600 12,000 5,000 8,000 (1,000) (9,600 Capital stock... Accumulated other comprehensive income. .