Question
Tarp Company acquired 90% of Loud Company on January 1, 20X3, for $234,000 cash. Loud's stockholders' equity consisted of common stock of $160,000 and retained
Tarp Company acquired 90% of Loud Company on January 1, 20X3, for $234,000 cash. Loud's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Loud's net assets revealed the following.
Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.
| 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 |
In consolidation at January 1, 20X3, what adjustment is necessary for Loud's equipment account?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Cornerstones Of Cost Accounting
Authors: Don Hansen, Maryanne M. Mowen
1st Edition
053873678X, 978-0538736787
