When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What is the amount of excess land allocation attributed to the controlling interest at the acquisition date?
A) $0.
B) $12,500.
C) $40,000.
D) $50,000.
E) $60,000.

Question

Quizplus · Accepted Answer

The excess land allocation is the difference between the fair value and book value of the land, which is $125,000 - $75,000 = $50,000. Since Valley Co. acquired 80% of Coleman, the controlling interest is 80% of the excess, which is 80% of $50,000 = $40,000.