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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 $445,000 but a fair value of $631,000. Kimmel has equipment (10-year life) with a book value of $282,000 but a fair value of $468,000. Paar uses the equity method to record its investment in Kimmel. On December 31, 2017, Paar has equipment with a book value of $311,500 but a fair value of $531,200. Kimmel has equipment with a book value of $197,400 but a fair value of $431,600. What is the consolidated balance for the Equipment account as of December 31, 2017?

Multiple Choice

  • $639,100.

  • $962,800.

  • $508,900.

  • Multiple Choice

  • $639,100.

  • $962,800.

  • $508,900.

  • Multiple Choice

  • $639,100.

  • $962,800.

  • $508,900.

  • $694,900.

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Answer #1

Answer: $639,100

Explanation

Consolidated balance for the Equipment account as of December 31, 2017
$
Paar's equipment book value on 12/31/14        311,500.00
Add: Kimmel's equipment book value on 12/31/14        197,400.00
Add: Original acquisition-date allocation to Kimmel's equipment        186,000.00
        (468,000 - 282,000)
Less: Amortization of Allocation ($186,000 ÷ 10 years for 3 years)        (55,800.00)
Consolidated balance for the Equipment account as of December 31, 2017        639,100.00
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