On January 1, 2016, Prima Corporation acquired 80 percent of Sunder Corporation's voting common stock. Sunders's buildings and equipment had a book value of $300,000 and a fair value of $350,000 at the time of acquisition. At what amount will Sunder's buildings and equipment will be reported in the consolidated statements?

Question

Quizplus · Accepted Answer

In a consolidation, the assets of the subsidiary are reported at their fair value at the time of acquisition. Since Sunder's buildings and equipment had a fair value of $350,000 at the time of acquisition, this is the amount at which they will be reported in the consolidated financial statements.

On January 1, 2016, Prima Corporation Acquired 80 Percent of Sunder