Hobbes Corporation’s purchase of stock of Tiger Company gave Hobbes voting control over Tiger. A portion of the amount Hobbes paid reflects the fact that Tiger's inventories have a market value in excess of their book value. How should this portion of the cost be accounted for by Hobbes Corporation? Select one: a. Included in the carrying value of the investment until disposition of the stock b. Amortized against investment revenue over the remaining useful life of the investment c. Reported as goodwill on the balance sheet of Hobbes Corporation d. Added to the inventory cost on Hobbes's consolidated balance sheet

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Hobbes Corporation’s purchase of stock of Tiger Company gave Hobbes voting control over Tiger. A portion of the amount Hobbes paid reflects the fact that Tiger's inventories have a market value in excess of their book value.

How should this portion of the cost be accounted for by Hobbes Corporation?

Select one:
a. Included in the carrying value of the investment until disposition of the stock
b. Amortized against investment revenue over the remaining useful life of the investment
c. Reported as goodwill on the balance sheet of Hobbes Corporation
d. Added to the inventory cost on Hobbes's consolidated balance sheet
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