HomeworkLib
Question

Chapter 3 Red Co. acquired 100% of Green, Inc. on January 1, 2017. On that date,...

Chapter 3

Red Co. acquired 100% of Green, Inc. on January 1, 2017. On that date, Green had land with a book value of $42,000 and a fair value of $52,000. Also, on the date of acquisition, Green had a building with a book value of $200,000 and a fair value of $390,000. Green had equipment with a book value of $350,000 and a fair value of $280,000. The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life. In Red's December 31, 2017 consolidated worksheet, what total amount of excess fair over book value amortization expense adjustments should Red recognize resulting from its 100% acquisition of Green?

rev: 06_20_2019_QC_CS-171156

Multiple Choice

  • $43,000.

  • $33,000.

  • $5,000.

  • $15,000.

  • $0.

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

The correct answer is $ 33000

Explanation and calculation

Amortization expense adjustment  

= ((Fair value of building - Book Value of building)/ remaining life) + ((Fair value of equipment - Book Value of equipment)/ remaining life of equipment)

= ((390000-200000)/10)+((350000-280000)/5)

= 19000 + 14000

= $ 33000

0 0
Add a comment
Know the answer?
Add Answer to:
Chapter 3 Red Co. acquired 100% of Green, Inc. on January 1, 2017. On that date,...
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. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Lowell Co. acquired 100% of Boston, Inc. on January 1, 2017. On that date, Boston had...

    Lowell Co. acquired 100% of Boston, Inc. on January 1, 2017. On that date, Boston had land with a book value of $42,000 and a fair value of $52,000. Also, on the date of acquisition, Boston had a building with a book value of $200,000 and a fair value of $390,000. Boston had equipment with a book value of $350,000 and a fair value of $280,000. Both companies use the same depreciation policy, that the building had a 10-year remaining...

  • Lowell Co. acquired 100% of Boston, Inc. on January 1, 2017. On that date, Boston had...

    Lowell Co. acquired 100% of Boston, Inc. on January 1, 2017. On that date, Boston had land with a book value of $42,000 and a fair value of $52,000. Also, on the date of acquisition, Boston had a building with a book value of $200,000 and a fair value of $390,000. Boston had equipment with a book value of $350,000 and a fair value of $280,000. Both companies use the same depreciation policy, that the building had a 10-year remaining...

  • Red Co. acquired 100% of Brown, Inc. on January 1, Yeart. On that date. Brown had:...

    Red Co. acquired 100% of Brown, Inc. on January 1, Yeart. On that date. Brown had: Book value Fair Value expected life Land 42.000 52.000 forever Building 200,000 600.000 20 years Equipment 350,000 250,000 10 years What will be the net effect on consolidated expenses for the year ended December 31, Year 1 related to the acquisition allocations of Brown? An increase in total expenses of $10,000 A reduction in total expenses of $10,000 b. c. An increase in total...

  • On January 1, 2017 Preibus acquired 100 % of Spicer. This acquisition was not a bargain...

    On January 1, 2017 Preibus acquired 100 % of Spicer. This acquisition was not a bargain purchase. On the date of acquisition, Spicer's Equipment had a net book value of 1,600,000 and a fair value of 1,435,082. Preibus determined that Spicer's equipment had a remaining life of 5 years at the date of acquisition. What is the consolidation adjustment (in addition to adding the two trial balance amounts together) that must be made to the Equipment account when preparing consolidated...

  • Sanders acquired 100% of Clinton on January 1, 2017. The transaction was not a bargain purchase....

    Sanders acquired 100% of Clinton on January 1, 2017. The transaction was not a bargain purchase. On the date of the acquisition, Clinton's Building account had a net book value of 3,973,264 and a fair value of 4,186,268. As of 1/1/2017, Clinton's buildings have a remaining life of 10 years and are depreciated on a straight-line basis with no salvage value. When preparing Sanders' consolidated financial statements for 2017, what AAP adjustment must be made for Depreciation expense?

  • 3. Green Company purchased 100% of Yellow Company on January 1, 2019 for $1,200,000 in cash....

    3. Green Company purchased 100% of Yellow Company on January 1, 2019 for $1,200,000 in cash. On the day of the purchase, Yellow had the following net assets: Book Value Fair Value Life 5 years Cash, receivables Equipment Land Building (net) $100,000 300,000 100,000 400,000 $100,000 350,000 150,000 380,000 10 years Payables Net Assets $200,000 $700,000 $190,000 $790,000 Green uses the acquisition method, as required. a. Prepare a schedule showing how to allocate the difference in fair value given up...

  • Problem II. On January 1, 2017, Parent Co. acquired 80% of Sub Inc. by paying $800,000....

    Problem II. On January 1, 2017, Parent Co. acquired 80% of Sub Inc. by paying $800,000. Non-controlling interest was valued at $200,000. Sub reported common stock on that date of $520,000 with retained earnings of $352,000. A building was undervalued in the company's financial records by $18,000. This building had a ten-year (10) remaining useful life. Copyrights of $80,000 were not recognized in the subsidiary's records and should be amortized over 20 years. Sub earned net income and paid cash...

  • Allison Corporation acquired 90 percent of Bretton on January 1, 2016. Of Bretton's total acquisition date...

    Allison Corporation acquired 90 percent of Bretton on January 1, 2016. Of Bretton's total acquisition date fair value, $60,000 was allocated to undervalued equipment (with a 10-year remaining life) and $80,000 was attributed to franchises (to be written off over a 20-year period). Since the takeover, Bretton has transferred inventory to its parent as follows: Year 2016 2017 2018 Transfer Cost Price $ 45,000 $ 90,000 48,000 80,000 69,000 92,000 $ Remaining at Year-End 30,000 (at transfer price) 35,000 (at...

  • Allison Corporation acquired 90 percent of Bretton on January 1, 2016. Of Bretton's total acquisition-date fair...

    Allison Corporation acquired 90 percent of Bretton on January 1, 2016. Of Bretton's total acquisition-date fair value, $60,000 was allocated to undervalued equipment (with a 10-year remaining life) and $80,000 was attributed to franchises (to be written off over a 20-year period). Since the takeover, Bretton has transferred inventory to its parent as follows: Year Cost Transfer Price Remaining at Year-End 2016 $ 45,000 $ 90,000 $ 30,000 (at transfer price) 2017 48,000 80,000 35,000 (at transfer price) 2018 69,000...

  • Allison Corporation acquired 90 percent of Bretton on January 1, 2016. Of Bretton's total acquisition-date fair...

    Allison Corporation acquired 90 percent of Bretton on January 1, 2016. Of Bretton's total acquisition-date fair value, $60,000 was allocated to undervalued equipment (with a 10-year remaining life) and $80,000 was attributed to franchises (to be written off over a 20-year period). Since the takeover, Bretton has transferred inventory to its parent as follows: Year 2016 2017 2018 Transfer Cost Price $ 45,000 $ 90,000 48,000 80,000 69.000 92.000 $ Remaining at Year-End 30,000 (at transfer price) 35,000 (at transfer...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT