CASE 1 Presented below are the financial balances for the BonGiovi Company and the Terens Company as of December 31, 2017, immediately before BonGiovi acquired Terens. Also included are the fair values for Terens Company's net assets at that date (thousands of US$). BonGiovi Terens Terens Book Value Book Value Fair Value 31.12.2017 31.12.2017 31.12.2017 Cash 870 240 240 Receivables 660 600 600 Inventory 1,230 420 580 Land 1,800 260 250 Buildings (Net) 1,800 540 650 Equipment (net] 660 380 400 Accounts Payable (570) (240) (240) Accrued expenses (270) (60) (60) Long term Liabilities (2,700) [1,020) 1,120 Common Stock (1,980) ($20par] Common Stock ($5 (420) park Additional paid in (210) (180) capital Retained earnings (1,170) (480) Revenue (2,880) (660) Expenses 2,760 620Note: Parenthesis indicates a credit balance Assume a business combination tock place at December 31, 2017. BonGiowi issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Terens. Stock issuance costs of $15 {in thousands) and direct costs of $10 {in thousands) were paid to effect this acquisition transaction. To settle a difference of opinion regarding Terens fair value, BonGiovi promises to pay an additional $5.2 (in thousands) to the former owners if Terens earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is 55 (in thousands). Question 1 Compute the investment to be recorded at the date of acquisition. A) 51,750. B) $1,755. C) 51,725. D) $1,760. E) 51,765