Question

Prant Company acquired all of Sedford Corporation’s assets and   liabilities on January 1, 20X2, in a business combination. At that date,   Sedford reported assets with a book value of $642,000 and liabilities of   $356,000. Prant noted that Sedford had $57,000 of capitalized research and   development costs on its books at the acquisition date that did not appear to   be of value. Prant also determined that patents developed by Sedford had a   fair value of $133,000 but had not been recorded by Sedford. Except for   buildings and equipment, Prant determined the fair value of all other assets   and liabilities reported by Sedford approximated the recorded amounts. In   recording the transfer of assets and liabilities to its books, Prant recorded   goodwill of $106,000. Prant paid $520,000 to acquire Sedford’s assets and   liabilities. If the book value of Sedford’s buildings and equipment was   $358,000 at the date of acquisition, what was their fair value?

Answer 1

Purchase   Consideration			520,000
Book value of assets	642,000
Book value of   Liabillities	356,000
Net Assets (book value)	286,000
Less : Capitalized reserch and   development costs on its books	57,000
Adjusted Book Value		229,000
Fair Value of patents		133,000
Goodwill		106,000	468,000
Fair value increase in   building and equipment			52,000
Book value of sedford's   buildings and equipment			358,000
Fair value of sedford's   buildings and equipment			410,000