In consolidation at January 1,2009,what adjustment is necessary for Hogan's Land account?

Question

Quizplus · Accepted Answer

The adjustment needed for Hogan's Land account would depend on the difference between the carrying value of this asset on the parent company's books and its fair value at the acquisition date.

Since no information is given about this difference, we cannot calculate the exact adjustment needed. However, we do know that Hogan's Land is an asset of the subsidiary company that needs to be eliminated in consolidation.

Therefore, we can assume that the adjustment would be to increase (debit) Hogan's Land account by the amount of its carrying value on the subsidiary's books. This is because the subsidiary's assets and liabilities are consolidated at their carrying amounts (also known as book values), which need to be adjusted to fair values during the consolidation process.

Based on this logic, the best choice is A) $7,000 increase.

In Consolidation at January 1,2009,what Adjustment Is Necessary for Hogan's