Toby Co. acquired all of the common stock of Winston Inc. on January 1, 2014, tr

Question

Toby Co. acquired all of the common stock of Winston Inc. on January 1, 2014, transferring consideration in an amount slightly more than the fair value of Winston’s net assets. At that time, Winston had buildings with a twenty-year useful life, a book value of $600,000, and a fair value of $696,000. On December 31.2014, Winston had buildings with a book value of $ 570,000 and a fair value of $648,000. On that date, Toby had building with a book value of $1,878,000 and a fair value of $2,160,000.

Required: What amount should be shown for buildings on the consolidated balance sheet dated December 31,2014?

Explanation / Answer

The fair value as on date of acquisition is to be considered

Hence total book value in consolidated balance sheet on dec 31, 2014= $696000+$1878000= $2574000

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