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Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2015. On that date, Paar’s...

Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2015. On that date, Paar’s equipment (10-year life) has a book value of $407,500 but a fair value of $534,500. Kimmel has equipment (10-year life) with a book value of $287,000 but a fair value of $414,000. Paar uses the equity method to record its investment in Kimmel. On December 31, 2017, Paar has equipment with a book value of $285,250 but a fair value of $445,950. Kimmel has equipment with a book value of $200,900 but a fair value of $377,700. What is the consolidated balance for the Equipment account as of December 31, 2017?

A) $486,150.

B) $823,650.

C) $613,150.

D) $575,050.

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Answer #1

ANSWER

correct option is D=$575,050

Book value of equipment (P company) 285,250
Book value of equipment (K company) 200,900

+ goodwill recognized by P company on Jan 31,2015

(414,000-287,000 )

 127,000
- goodwill amortized (127,000/10) * 3 (38,100)
Consolidated balance of equipment 575,050

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