Parr Company purchased 100% of the voting common stock of Super Company for $2,000,000.There are no liabilities.The following book and fair values pertaining to Super Company are available:
$\begin{array}{lrr}
& \text { Book Value } & \text { Fair Value } \
\text { Current assets } & \$ 300,000 & \$ 600,000 \
\text { Land and building } & 600,000 & 900,000 \
\text { Machinery } & 500,000 & 600,000 \
\text { Goodwill } & 100,000 & ?
\end{array}$
The amount of machinery that will be included in on the consolidated balance sheet is:

A)$560,000
B)$860,000
C)$600,000
D)$900,000

Question

Parr Company purchased 100% of the voting common stock of Super Company for $2,000,000.There are no liabilities.The following book and fair values pertaining to Super Company are available: 
$\begin{array}{lrr}
& \text { Book Value } & \text { Fair Value } \
\text { Current assets } & \$ 300,000 & \$ 600,000 \
\text { Land and building } & 600,000 & 900,000 \
\text { Machinery } & 500,000 & 600,000 \
\text { Goodwill } & 100,000 & ?
\end{array}$
 The amount of machinery that will be included in on the consolidated balance sheet is:

A)$560,000
B)$860,000
C)$600,000
D)$900,000

Quizplus · Accepted Answer

The amount of machinery that will be included in the consolidated balance sheet is its fair value of $600,000, as assets acquired in a business combination are recorded at their fair values on the acquisition date.

Parr Company Purchased 100% of the Voting Common Stock of Super