e these items at fair value. Assume that Mooney has access to 3 different geographical markets (Northwest, Southwest, and Midwest). The Northwest market has legal restrictions and will take at least 6 months to obtain approval to sell the machines in the Northwest. The markets in the Southwest and Midwest can be
e these items at fair value. Assume that Mooney has access to 3 different geographical markets (Northwest, Southwest, and Midwest). The Northwest market has legal restrictions and will take at least 6 months to obtain approval to sell the machines in the Northwest. The markets in the Southwest and Midwest can be
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 9 options:
Mooney Corporation has acquired 150 machines in a business combination. Mooney does not intend to use these machines so it is required to recognize these items at fair value. Assume that Mooney has access to 3 different geographical markets (Northwest, Southwest, and Midwest). The Northwest market has legal restrictions and will take at least 6 months to obtain approval to sell the machines in the Northwest. The markets in the Southwest 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% |
|
Midwest |
$49,000 |
35% |
40% |
Which market should Mooney Corporation use to determine the fair value of the machines?
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