Use the following facts for Multiple Choice problems 17 and 18 (each question is independent of the other):

The following financial statement information is for an investor company and an investee company on January 1, 2016. On January 1, 2016, the investor companys common stock had a traded market value of $22 per share, and the investee companys common stock had a traded

Book Values Fair Values

Investor Investee Investor Investee

Receivables & inventories ................ $ 96,000 $ 48,000 $ 90,000 $ 43,200

Land ................................. 192,000 96,000 210,000 120,000

Property & equipment ................... 216,000 96,000 240,000 124,800

Trademarks & patents ................... 80,000 76,800

Total assets............................ $504,000 $240,000 $620,000 $364,800

Liabilities.............................. $144,000 $ 76,800 $160,000 $ 82,000

Common stock ($1 par) .................. 20,000 16,000

Additional paid-in capital................. 268,000 137,600

Retained earnings ...................... 72,000 9,600

Total liabilities & equity ................... $504,000 $240,000

Net assets ............................ $360,000 $163,200 $460,000 $282,800

17. Assume that the investor company issued 15,000 new shares of the investor companys common stock in exchange for all of the individually identifiable assets and liabilities of the investee company, in a transaction that qualifies as a business combination. The financial information presented, above, was prepared immediately before this transaction. Provide the Investor Companys balance (i.e., on the investors books, before consolidation) for Goodwill immediately following the acquisition of the investees net assets:

A. $166,800

B. $119,600

C. $47,200

D. $5,200

18. Assume that the investor company issued 15,000 new shares of the investor companys common stock in exchange for 100% of the common stock of the investee company, in a transaction that qualifies as a business combination. The financial information presented, above, was prepared immediately before this transaction. Provide the Investor Companys balance (i.e., on the investors books, before consolidation) for Investment in Investee immediately following the acquisition of the investees common stock:

A. $460,000

B. $330,000

C. $282,800

D. $270,000