DePaul Corporation has acquired 600 machines in a business combination. DePaul does not intend to use these machines so it is required to recognize these items at fair value. Assume that DePaul is located in the Midwest market and there are 4 different geographical markets (Northwest, Southwest, Southeast and Midwest). The Northwest market has legal restrictions and will take 6 months to obtain approval to sell the machines in that market. The markets in the Southwest, Southeast and Midwest can be accessed immediately. Volumes and prices are listed below Market Price Entity Specific Volume Market Volume Northwest $42,000 20% 45% Southwest $52,000 45% 15% Southeast $50,000 15% 35% Midwest $49,000 25% 5% Which market should DePaul Corporation use to determine the fair value of the machines? Question 12 options: a) Midwest b) Southeast c) Southwest d) They cannot use any of these markets until the legal restrictions are lifted. e) Northwest
DePaul Corporation has acquired 600 machines in a business combination. DePaul does not intend to use these machines so it is required to recognize these items at fair value. Assume that DePaul is located in the Midwest market and there are 4 different geographical markets (Northwest, Southwest, Southeast and Midwest). The Northwest market has legal restrictions and will take 6 months to obtain approval to sell the machines in that market. The markets in the Southwest, Southeast and Midwest can be accessed immediately.
Volumes and prices are listed below
|
Market |
Price |
Entity Specific Volume |
Market Volume |
|
Northwest |
$42,000 |
20% |
45% |
|
Southwest |
$52,000 |
45% |
15% |
|
Southeast |
$50,000 |
15% |
35% |
|
Midwest |
$49,000 |
25% |
5% |
Which market should DePaul Corporation use to determine the fair value of the machines?
Question 12 options:
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