Question

1. 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 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.

The acquisition value attributable to the noncontrolling interest at January 1, 2019 is:

• $23,400.
• $24,900.
• $20,000.
• $24,000.
• $26,000.

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 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.

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

• $1,600 increase.

• $1,440 decrease.

• No adjustment is necessary.

• $1,600 decrease.

• $1,440 increase.

3.

Required information

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 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.

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

Multiple Choice

• $1,800 decrease.

• $2,000 decrease.

• $1,800 increase.

• $2,000 increase.

• No adjustment is necessa

Answer 1

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. Any excess consideration transferred over fair value is attributable to an un-amortized patent with a useful life of 5 years.

In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Equipment account is $2000 decrease