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Question
On January 1, 2012, the Knight Corporation purchased 80% of the Red Company's voting stock for $1,500,000. Red's net assets had a book value of $1,350,000; the fair value of Red's land was $325,000 greater than its book value. The book value of Knight's assets immediately after the acquisition of Red totaled $6,850,000 while Red's assets had a book value of $3,350,000. Assuming that Knight used the acquisition method to prepare its consolidated balance sheet, how much goodwill was reported on the January 1, 2012 consolidated balance sheet?
A. $525,000
B. $200,000
C. $160,000
D. $42,000
Answer
This answer is hidden. It contains 412 characters.
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