On December 31, 20X8, Mercury Corporation acquired 100 percent ownership of Saturn Corporation. On that date, Saturn reported assets and liabilities with book values of $300,000 and $100,000, respectively, common stock outstanding of $50,000, and retained earnings of $150,000. The book values and fair values of Saturn's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000.
1. Required information
Based on the preceding information, what amount of differential will appear in the consolidating entries required to prepare a consolidated balance sheet immediately after the business combination, if the acquisition price was $240,000?
$0
$40,000
$25,000
$5,000
2. Required information
Based on the preceding information, what amount of goodwill will be reported if the acquisition price was $240,000?
$0
$40,000
$15,000
$35,000
3. Required information
Based on the preceding information, what amount of goodwill will be reported if the acquisition price was $195,000?
$0
$40,000
$15,000
$35,000