Compute consolidated equipment (net) at the date of the acquisition.
A) $ 400.
B) $ 660.
C) $1,060.
D) $1,040.
E) $1,050.

Question

Quizplus · Accepted Answer

The consolidated equipment (net) at the date of acquisition is the sum of the equipment (net) of the parent company and the subsidiary company.

Equipment (net) of Parent Company = $600 - $160 = $440
Equipment (net) of Subsidiary Company = $780 - $100 = $680

Consolidated Equipment (Net) = $440 + $680 = $1,120

However, we need to subtract the excess of fair value over book value of the subsidiary's equipment. The fair value of the equipment is $700, and the book value is $100. Therefore, the excess is $600.

Consolidated Equipment (Net) = $1,120 - $600 = $520

Finally, we need to add the cost of the investment, which is $540.

Consolidated Equipment (Net) = $520 + $540 = $1,060

Therefore, the best choice is C.

Compute Consolidated Equipment (Net) at the Date of the Acquisition