Amie, Inc. has 100,000 shares of $2 par value stock outstanding Prairie Corporation acquired 30,000 of Amie's shares on January 1, 2012, for $120,000 when Amie's net assets had a total fair value of $350,000. On July 1, 2015, Prairie bought an additional 60,000 shares of Amie from a single stockholder for $6 per share. Although Amie's shares were selling in the $5 range around July 1, 2015, Prairie forecast that obtaining control of Amie would produce significant revenue synergies to justify the premium price paid. If Amie's net identifiable assets had a fair market value of $500,000 at July 1, 2015, how much goodwill should Prairie report in its post-combination consolidated balance sheet? A) $60,000 B) $90,000 C) $100,000 D) $0
Amie, Inc. has 100,000 shares of $2 par value stock outstanding Prairie Corporation acquired 30,000 of Amie's shares on January 1, 2012, for $120,000 when Amie's net assets had a total fair value of $350,000. On July 1, 2015, Prairie bought an additional 60,000 shares of Amie from a single stockholder for $6 per share. Although Amie's shares were selling in the $5 range around July 1, 2015, Prairie forecast that obtaining control of Amie would produce significant revenue synergies to justify the premium price paid. If Amie's net identifiable assets had a fair market value of $500,000 at July 1, 2015, how much goodwill should Prairie report in its post-combination consolidated balance sheet? A) $60,000 B) $90,000 C) $100,000 D) $0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
choose correct option with calculation
Transcribed Image Text:Amie, Inc. has 100,000 shares of $2 par value stock outstanding
Prairie Corporation acquired 30,000 of Amie's shares on January 1, 2012, for $120,000 when Amie's
net assets had a total fair value of $350,000.
On July 1, 2015, Prairie bought an additional 60,000 shares of Amie from a single stockholder for $6
per share.
Although Amie's shares were selling in the $5 range around July 1, 2015, Prairie forecast that
obtaining control of Amie would produce significant revenue synergies to justify the premium price
paid.
If Amie's net identifiable assets had a fair market value of $500,000 at July 1, 2015, how much
goodwill should Prairie report in its post-combination consolidated balance sheet?
A) $60,000
B) $90,000
C) $100,000
D) $0
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