Z Company is acquiring W Company as follows:

Z Company will pay $10,000,000 in cash and issue 1,000,000 shares of its publicly traded common stock to the owners of W Company for 100% of the voting common stock in W Company. Z Company stock has a par value of $5 and is trading at $11 per share on the date the acquisition is consummated.

On the date the acquisition is consummated the fair value of W Companys net assets as listed on their closing date balance sheet is $16,000,000. In addition, W Company owns certain patents that have a fair value of $2,000,000 but are not included in the closing date balance sheet of W Company

What is the acquisition cost to Z Company?

a) $16,000,000

b) $23,000,000

C) $21,000,000

D) $15,000,000

E) $18,000,000

How much goodwill will be recorded by Z Company to properly record the acquisition of W Company?

A) None. Because this is a "Bargain Purchase"

B) $5,000,000

C) None, because the acquisition cost is equal to the fair value of net assets acquired

D) $3,000,000