Reeder Corp. acquired one hundred percent of O’Neill Inc. on January 1, 2019, at a price in excess of the subsidiary's fair value. On that date, Reeder’s equipment (ten-year life) had a book value of $380,000 but a fair value of $460,000. O’Neill had equipment (ten-year life) with a book value of $240,000 and a fair value of $370,000. Reeder used the partial equity method to record its investment in O’Neill. On December 31, 2021, Reeder had equipment with a book value of $270,000 and a fair value of $400,000. O’Neill had equipment with a book value of $180,000 and a fair value of $300,000. What is the consolidated balance for the Equipment account as of December 31, 2021?
Multiple Choice $531,000. $541.000. $580,000. $450,000. $567,000.
Answer | |
Consolidated Balance for the Equipment |
|
O,Neill Equipment = $370,000 - $240,000 | $ 130,000 |
Reeder Corp. Equipment Book value | $ 270,000 |
O,Neill Equipment Book Value | $ 180,000 |
Less: Excess Amortization ($130,000/10 years × 3yrs) | -$ 39,000 |
Consolidated Balance for the Equipment | $ 541,000 |
Option B is Correct | |
Reeder Corp. acquired one hundred percent of O’Neill Inc. on January 1, 2019, at a price...
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