Question

Crawford Corporation acquires Nashville, Inc. The parent pays more for it than the fair value of...

Crawford Corporation acquires Nashville, Inc. The parent pays more for it than the fair value of the subsidiary’s net assets. On the acquisition date, Crawford has equipment with a book value of $418,000 and a fair value of $592,000. Nashville has equipment with a book value of $302,500 and a fair value of $366,000. Nashville is going to use push-down accounting. Immediately after the acquisition, what amounts in the Equipment account appear on Nashville’s separate balance sheet and on the consolidated balance sheet?

$302,500 and $894,500.

$366,000 and $958,000.

$366,000 and $784,000.

$302,500 and $720,500.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans - $366000 and $784000 (Option 3rd)

In case of Nashville, excess of Fair value over Book value = ($366000 - $302500) = $63500. Since Nashville is going to use push-down accounting, the value of equipment in Nashville's separate balance sheet will increased to fair value of $366000.
Whereas in Consolidated balance sheet, value of equipment = ($418000 book value of Crawford + $366000 Fair value of Nashville) = $784000

(If there are any questions, kindly let me know in comments. If the solution is to your satisfaction, a thumbs up would be appreciated. Thank You)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A parent company acquires all of the outstanding common stock of its subsidiary for cash purchase...
A parent company acquires all of the outstanding common stock of its subsidiary for cash purchase price of $325,000. On the acquisition date, the subsidiary reported a book value of Stockholders’ Equity of $120,000, comprised of $50,000 of Common Stock and $70,000 of Retained Earnings. An examination of the subsidiary’s balance sheet revealed that book values were equal to fair value for all assets, expect for an unrecorded patent, which the parent valued at $160,000 during the acquisition. a.     What did...
A parent company acquires all of a subsidiary's voting stock at the beginning of 2018. At...
A parent company acquires all of a subsidiary's voting stock at the beginning of 2018. At the date of acquisition, the subsidiary's equipment had a book value of $40 million and a fair value of $15 million. The equipment had a 10-year remaining life, straight-line. Consolidation eliminating entry (O), on the consolidation working paper for 2021, has what effect on consolidated depreciation expense? Select one: A. Debit for $2.5 million B. Credit for $2.5 million C. Debit for $10 million...
Parent Industries bought Subsidiary Inc.’s voting stock on January 1, 2019 for $42,000, when Subsidiary’s book...
Parent Industries bought Subsidiary Inc.’s voting stock on January 1, 2019 for $42,000, when Subsidiary’s book value was $8,000. Fair value information on Subsidiary’s assets and liabilities at the date of acquisition is as follows: Property and equipment (P&E) is overvalued by $7,000. P&E has a 10-year remaining life, straight-line. Previously unreported identifiable intangibles are valued at $8,000. These intangibles have indefinite lives, but testing reveals impairment of $2,000 in 2019 and $1,000 impairment in 2020. Goodwill reported for this...
Consolidation entries at date of acquisition (purchase price greater than book value) A parent company exchanges...
Consolidation entries at date of acquisition (purchase price greater than book value) A parent company exchanges 12,000 shares of its $2 par value common stock, with a fair value of $9/share, for all of the shares owned by the subsidiary’s shareholders. On the acquisition date, the subsidiary reported $30,000 of contributed capital (i.e., common stock) and $45,000 of Retained Earnings. An examination of the subsidiary’s balance sheet revealed that book values were equal to fair values for all assets except...
Prepare a consolidated workpapers and journal enteries for the following scenarios: Include calculations Parent Corporation acquired...
Prepare a consolidated workpapers and journal enteries for the following scenarios: Include calculations Parent Corporation acquired a 70 percent interest in Subsidiary Corporation’s outstanding voting common stock on January 1, 2011, for $735,000 cash. The stockholders’ equity of Subsidiary on this date consisted of $750,000 capital stock and $150,000 retained earnings. The difference between the fair value of Subsidiary and the underlying equity acquired in Subsidiary was assigned $7,500 to Subsidiary’s undervalued inventory, $21,000 to undervalued buildings, $31,500 to undervalued...
Assume a parent company acquires 80% of the outstanding voting common stock of a subsidiary on...
Assume a parent company acquires 80% of the outstanding voting common stock of a subsidiary on January 1, 2018. One the acquisition date, the identifiable net assets of the subsidiary had fair value that approximately their recorded book value except for a paten, which had a fair value of $200,000 and not recorded book value. On the date of acquisition, the patent had five years of remaining useful life and the parent company amortizes its intangible assets using straight line...
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,797,600 in cash consideration....
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,797,600 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $449,400. Seidel’s acquisition-date total book value was $1,785,000. The fair value of Seidel’s recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets—a trademark with an indefinite life and estimated fair value of $257,250 and several customer relationships estimated to be worth $189,000 with four-year remaining...
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,746,240 in cash consideration....
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,746,240 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $436,560. Seidel’s acquisition-date total book value was $1,734,000. The fair value of Seidel’s recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets—a trademark with an indefinite life and estimated fair value of $249,900 and several customer relationships estimated to be worth $183,600 with four-year remaining...
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,866,080 in cash consideration....
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,866,080 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $466,520. Seidel’s acquisition-date total book value was $1,853,000. The fair value of Seidel’s recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets—a trademark with an indefinite life and estimated fair value of $267,050 and several customer relationships estimated to be worth $196,200 with four-year remaining...
Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800...
Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance: Debit Credit Cash $500 Accounts Receivable 600 Inventory 800 Buildings (net) (5 year life) 1,500 Equipment (net) (2 year life) 1,000 Land 900 Accounts Payable $400 Long-term liabilities (due 12/31/13) 1,800 Common Stock 1,000 Additional paid-in capital 600 Retained earnings 1,500 Total $5,300 $5,300 Net income and dividends reported by Hurley for 2010...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT