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.

1. In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Equipment account?

Multiple Choice

a. $4,000 increase.

b. $4,000 decrease.

c. $3,600 increase.

d. $3,600 decrease.

e. No adjustment is necessary.

2. In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Equipment account?

Multiple Choice

$2,000 increase.

$2,000 decrease.

$1,800 increase.

$1,800 decrease.

No adjustment is necessary.