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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 useful life and the equipment had a 5-year remaining useful life.

On December 31, 2020, the two companies have the following assets:

Lowell

Boston

BV

FV

BV

FV

Land

50,000

60,000

32,000

55,000

Building

300,000

500,000

120,000

334,000

Equipment

600,000

390,000

70,000

66,000

What is the consolidated balance of building on December 31, 2020, when Lowell prepares for the consolidated financial statement?

business   accounting   
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Answer #1

Consolidated balance of building= 500,000+334,000

= 884,000

The balance of building in standalone financial statement should be at fair value.

So while preparing consolidated balance sheet each line item should be added separately. So fair value of building is taken

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