Question
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogans total acquisition-date fair value.
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogans total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:
| Book Value | Fair Value | ||||||
| Buildings (10-year life) | $ | 10,000 | $ | 8,000 | |||
| Equipment (4-year life) | 14,000 | 18,000 | |||||
| Land | 5,000 | 12,000 | |||||
Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.
In consolidation at December 31, 2020, what net adjustment is necessary for Hogan's Patent account?
Multiple Choice
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$4,200.
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$5,500.
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$8,000.
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$6,600.
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Fundamental Accounting Principles
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
20th Edition
1259157148, 78110874, 9780077616212, 978-1259157141, 77616219, 978-0078110870
