14. Crawford Corporation acquires Nashville, Inc. The parent pays more for it th

Question

14. Crawford Corporation acquires Nashville, Inc. The parent pays more for it than the fair value of the subsidiary's net assets. On the acquisition date, Crawford has equipment with a book value of $430,000 and a fair value of $609,000. Nashville has equipment with a book value of S336,500 and a fair value of $441,500. Nashville is going to use push-down accounting. Imme- diately after the acquisition, what amounts in the Equipment account appear on Nashvilles separate balance sheet and on the consolidated balance sheet? a. $336,500 and $945,500 b. $336,500 and $766,500. C. $441,500 and $1,050,500 d. $441,500 and $871,500.

Explanation / Answer

d. $441,500 and $871,500

The $105,000 excess acquisition-date fair value allocation to equipment is "pushed-down" to the subsidiary and increases its balance to $441,500. The consolidated balance is $871,500 book value for Crawford ($430,000 plus fair value for Nashville $441,500).

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