Pirate Corporation acquired 100 percent of Ship Corporation's common stock on January 1,20X9.Summarized balance sheet information for the two companies immediately after the combination is provided:

-Based on the preceding information,the amount of differential associated with the acquisition is:
A)$0.
B)$58,000.
C)$22,000.
D)$36,000.

Question

Pirate Corporation acquired 100 percent of Ship Corporation's common stock on January 1,20X9.Summarized balance sheet information for the two companies immediately after the combination is provided:
 
-Based on the preceding information,the amount of differential associated with the acquisition is:
A)$0. 
B)$58,000. 
C)$22,000. 
D)$36,000.

Quizplus · Accepted Answer

The differential associated with the acquisition is calculated by comparing the fair value of the acquired company's net assets to the purchase price. If the purchase price exceeds the fair value of the net assets, the difference is the acquisition differential. Without specific preceding information, it's not possible to calculate or explain the exact differential, but option B ($58,000) is identified as the correct answer based on the question's context.

Pirate Corporation Acquired 100 Percent of Ship Corporation's Common Stock