Showing posts with label Cattleman's Steakhouse. Show all posts
Showing posts with label Cattleman's Steakhouse. Show all posts

Saturday, October 10, 2020

The balance sheet of Cattleman's Steakhouse shows assets of $86,400 and liabilities of $15,000

The balance sheet of Cattleman's Steakhouse shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. Longhorn paid Cattleman's $95,000 to acquire all of its assets and liabilities. Longhorn should record goodwill on this purchase of:



A) $3,600.

B) $5,000.

C) $20,000.

D) $23,600.


Answer: C


Which of the following is true concerning goodwill?


A) Goodwill can never be recorded.

B) Goodwill is recorded when a company is purchased for more than the fair value of its identifiable net assets.

C) Goodwill is recorded when the market value of a company exceeds the fair value of its identifiable net assets.

D) Goodwill is recorded as a revenue in the income statement.


Answer: B


In accounting, goodwill


A) Is never recorded.

B) May be recorded when a company's level of net income exceeds the industry average.

C) Must be expensed in the period when it is acquired.

D) May be recorded when the company purchases another business.


Answer: D

Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will the purchase of inventory with cash affect each ratio?

Assuming a current ratio of 1.2 and an acid-test ratio of 0.80, how will the purchase of inventory with cash affect each ratio? A) Increase ...