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Please provide answer to the question below and why?
Question 3:
If the 100% stock acquisition of Sub Company by Parent Company was a bargain
purchase, what was the purchase price of Sub Company?
a) $650,000
b) $600,000
c) $550,000
d) None of the above
Solution
Fair value of net assets of sub = 650000 - 50000 = 600000
For making it a bargain purchase deal price pais must be lesser than 600,000, accordingly correct
option is:
c) $550,000

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Please provide answer to the question below and why- Question 3- If.docx

  • 1. Please provide answer to the question below and why? Question 3: If the 100% stock acquisition of Sub Company by Parent Company was a bargain purchase, what was the purchase price of Sub Company? a) $650,000 b) $600,000 c) $550,000 d) None of the above Solution Fair value of net assets of sub = 650000 - 50000 = 600000 For making it a bargain purchase deal price pais must be lesser than 600,000, accordingly correct option is: c) $550,000