Penco acquired 60% of Senco's outstanding common stock for $3,120,000 cash. Senco's net assets have a book value of $4,000,000 and a current value of $4,400,000. The $400,000 difference between book value and current value relates to a parcel of land that has a book value of $600,000.
Required:
a. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the parent company concept.
b. Repeat requirement a using the economic unit concept.

Question

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The Answer of Penco acquired 60% of Senco's outstanding common stock for $3,120,000 cash. Senco's net assets have a book value of $4,000,000 and a current value of $4,400,000. The $400,000 difference between book value and current value relates to a parcel of land that has a book value of $600,000.
Required:
a. Determine the amounts at which the land and goodwill would be reported in the consolidated financial statements under the parent company concept.
b. Repeat requirement a using the economic unit concept.

Penco Acquired 60% of Senco's Outstanding Common Stock for $3,120,000