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A company is being acquired. At the date of acquisition, the fmv of the acquired firm's equipment was $150,000 greater than the book value, and
A company is being acquired. At the date of acquisition, the fmv of the acquired firm's equipment was $150,000 greater than the book value, and the equipment had an estimated life of 10 years. This is the only identified asset where fmv exceeded bv. The total differential is $160,000. Which of the following statements is true?
- When creating consolidated statements, the equipment account must be increased by $150,000. Goodwill is $10,000
- When creating consolidated statements, the equipment account must be decreased by $150,000. Goodwill is $310,000
- The difference between fmv and book value of equipment should be ignored. Goodwill is impossible to calculate at this time. 4.Depreciation expense for the first year after acquisition will increase by $150,000; goodwill is $10,000 unless impaired.
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