Octopus Inc. acquired Guppy in 1999. Guppy has a market value of $70 million. Octopus paid $95 million in Octopus common stock to acquire all outstanding shares. Balance sheet information for Guppy includes:

	Book Value	Fair Value
Accounts Receivable	$15.0 million	$14.5 million
Inventory	16.5	21.5
Fixed Assets	24.1	29.3
Patents	0	26
Liabilities	-6.1	-6.1
Total	$49.5 million	$ 85.2 million

This acquisition was recorded as a pooling of interest; the books of Octopus will include:

	a.	Debit various asset & liabilities for a total $85.2 million & credit stockholders' equity for the same amount
	b.	Debit Guppy acquisition for $70 million & credit stockholders' equity for the same amount
	c.	Record the patents at their fair value of $26 million
	d.	Debit various assets & liabilities for a total $49.5 million & credit stockholders' equity accounts for the same amount

QUESTION 29

Given the information from Question 28, but the acquisition was recorded using the purchase method; the books of Octopus will include:

	a.	Goodwill is recorded for $9.8 million
	b.	All asset & liability accounts would be recorded at fair value
	c.	The market value of Guppy at $70 million is of no concern
	d.	Patents are recorded at $26.0 million
	e.	All of the above

1 points

QUESTION 30

According to SFAS No. 142, goodwill:

	a.	Is never recorded under the new rules
	b.	Is recorded, but will be written off as an operating expense within the year of acquisition
	c.	Will be amortized over a maximum 40 years
	d.	Is not amortized, but tested at least annually for impairment

1 points

QUESTION 31

Exxon acquired Mobil in 1998 for $77.2 billion. This was an example of:

	a.	A horizontal merger
	b.	The last example of the purchase method ever recorded
	c.	A vertical merger
	d.	A conglomerate merger