Question
On January 1, 2020, Elva Corp. paid $750,000 for 80% of Fenton Co. when the book value of Fenton's net assets was $800,000. Fenton owned
On January 1, 2020, Elva Corp. paid $750,000 for 80% of Fenton Co. when the book value of Fenton's net assets was $800,000. Fenton owned a building with a fair value of $150,000 and a book value of $120,000.
Required:
At what amount would the building appear on a consolidated balance sheet prepared immediately after the combination, under the acquisition method of accounting for business combinations?
Select one:
a.
| Book value of building |
| $ 50,000 |
| Allocation of difference |
| 30,000 |
| Fentons building for consolidation |
| $ 80,000 |
b.
| Book value of building |
| $ 100,000 |
| Allocation of difference |
| 30,000 |
| Fentons building for consolidation |
| $ 70,000 |
c.
| Book value of building |
| $ 120,000 |
| Allocation of difference |
| 30,000 |
| Fentons building for consolidation |
| $ 160,000 |
d.
| Book value of building |
| $ 110,000 |
| Allocation of difference |
| 30,000 |
| Fentons building for consolidation |
| $ 80,000 |
e.
| Book value of building |
| $ 120,000 |
|
Allocation of difference |
|
$30,000 |
| Fentons building for consolidation |
| $ 150,000 |
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Accounting Information Systems
Authors: Marshall B Romney, Paul J. Steinbart, Scott L. Summers, David A. Wood
15th Edition
0135572835, 9780135572832
