Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance;

Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life. FIFO inventory valuation method is used.
Compute the amount of Hurley's buildings that would be reported in a December 31, 2010, consolidated balance sheet.

Question

Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance;

Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life. FIFO inventory valuation method is used.
Compute the amount of Hurley's buildings that would be reported in a December 31, 2010, consolidated balance sheet.

Quizplus · Accepted Answer

Firstly, we need to prepare a consolidated worksheet to consolidate the financial statements of Perry Company and Hurley Corporation.

After consolidating the financial statements of Perry Company and Hurley Corporation on December 31, 2010, the buildings of Hurley Corporation would be reported at a value of $1,260 ($1,800 original cost less $540 accumulated depreciation).

Therefore, the correct answer is B.

Perry Company Acquires 100% of the Stock of Hurley Corporation