Separating Cost into Components of the Major Conceptual Elements Penn Inc. acquired all of Senn Inc.’s outstanding common stock for $800,000 cash. (Assume that there were no direct costs or contingent consideration.) Information about Senn as of the acquisition date is as follows:

Required 1. Separate the cost of the investment into the individual components of the major conceptual el¬
ements as of the acquisition date.
2. Explain why the current value of the long-term debt is higher than its book value.
Problems