Question

19-Lake Incorporated purchased all of the outstanding stock of Huron Company paying $960,000 cash. Lake assumed...

19-Lake Incorporated purchased all of the outstanding stock of Huron Company paying $960,000 cash. Lake assumed all of the liabilities of Huron. Book values and fair values of acquired assets and liabilities were:

Book Value

Fair Value

Current assets (net)

$

130,700

$

124,400

Property, plant, equip. (net)

612,000

760,000

Liabilities

150,400

177,000


Lake would record goodwill of:

Multiple Choice

$367,700.

$252,600.

$75,600.

$0.

20-An exclusive 20-year right to manufacture a product or use a process is a:

Multiple Choice

Trademark.

Patent.

Franchise.

Copyright.

13-A change in the estimated useful life and residual value of machinery in the current year is handled as:

Multiple Choice

A cumulative adjustment to income in the current year for the difference in depreciation under the new versus old estimates.

A retrospective change back to the date of acquisition as though the current estimated life and residual value had been used all along.

A prospective change from the current year through the remainder of its useful life, using the new estimates.

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