Multiple Choice Queistons
1. Now assume the acquisition cost to PR is $60,000 (not the right answer). Other facts are the same as originally reported. Goodwill reported on this acquisition is
a. $35,600
b. $35,800
c. $44,400
d. $49,400
2. Now assume PR paid $8,000 in cash for SX's net assets. There are no consultant fees, and no shares are issued. Assume that SX's previously unrecorded intangible assets, capitalizable per GAAP, have a fair value
of $500. PR records a bargain gain of
a. $ 0
b. $3,100
c. $3,600
d. $4,100
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. .