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Exercise Answers - General Concepts
Exercise Answers - General Concepts
Raphael Company paid 2,000,000 for the net assets of Paris Corporation and Paris was then
dissolved. Paris had no liabilities. The fair values of Paris’ assets were 2,500,000. Paris’s only
non-current assets were land and equipment with fair values of 160,000 and 640,000,
respectively. At what value will the equipment be recorded by Raphael?
640,000
Which of the following situations would require the use of the acquisition method in a business
combination?
Which of the following is a reason why a company would expand through a combination, rather
than by building new facilities?
All of the other choices are possible reasons that a company might choose a
combination.