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Snowflake Corp.

Penguin, Inc. acquires 100% of the outstanding shares of Snowflake Corp. for $2,250,000 and accounts for the transaction using the purchase method. Snowflake's balance sheet at the acquisition date is as follows:

Snowflake, Corp. Balance Sheet Acquisition Date
	Historical Cost	Current Market Value
Assets
Current Assets	$900,000	$900,000
Depreciable Assets less Accumulated Depreciation	$875,000	$1,250,000
Goodwill
Total Assets	$1,775,000
Liabilities and Equities
Liabilities	$1,100,000	$1,100,000
Deferred Income Tax Liability	$125,000	$125,000
Shareholders' Equity	$550,000
Total Liabilities and Equities	$1,775,000

1.Based on the information concerning Snowflake Corp. what is the market value of the company's shareholders' equity at the acquisition date?

$1,775,000

$475,000

$2,250,000

$0

2.Based on the information concerning Snowflake Corp. by what amount would Penguin increase depreciable assets when it consolidates Snowflake on the acquisition date?

$1,775,000

$475,000

$2,250,000

$375,000

3.Based on the information concerning Snowflake Corp. what is the value of the goodwill related to the acquisition?

$1,775,000

$475,000

$2,250,000

$1,325,000

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