Question
Davis acquires 100% of Ramos on January 1st, 2009. Ramos will be operated as a separate subsidiary. Davis will use the equity method to account
Davis acquires 100% of Ramos on January 1st, 2009. Ramos will be operated as a separate subsidiary. Davis will use the equity method to account for its investment in Ramos. In 2013, Davis has net income of $400,000 and pays dividends of $100,000. Ramos has Net Income of $200,000 and pays dividends of $75,000. At acquisition date, Davis has a building with a BV of $800,000 and FV of $900,000. Both buildings have a remaining useful life of 10 years (assume straight line depreciation). At December 31, 2013 Davis had book value (BV) of Building of 5,000,000 and fair value (FV) of 6,000,000. Ramos had BV of Building of 2,000,000 and FV of 1,500,000.
d. How much is consolidated buildings at December 31, 2013?
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