1. Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2019 when Park's book value was $560,000. The Royce stock was not actively traded. On the date of acquisition, Park had equipment (with a ten-year life) that was undervalued in the financial records by $140,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid.

Royce Co.Park Co.Book ValueBook ValueFair ValueCurrent assets$868,000$420,000$448,000Equipment364,000280,000400,000Buildings574,000210,000210,000Liabilities(546,000)(168,000)(168,000)Revenues(1,260,000)(560,000)Expenses700,000420,000Investment incomeNot Given

What is the consolidated balance of the Equipment account at December 31, 2020?

• $775,600.
• $644,400.
• $719,600.
• $784,000.
• 700,000

2.McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's 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 ValueFair ValueBuildings (10-year life)$10,000$8,000Equipment (4-year life)14,00018,000Land5,00012,000

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?

• No adjustment is necessary.
• $8,000.
• $6,600.
• $4,200.
• $5,500.