12. Parrett Corp. acquired one hundred percent of Jones Inc. on January 1, 2009,

Question

12. Parrett Corp. acquired one hundred percent of Jones Inc. on January 1, 2009, at a price in excess of the subsidiary's fair value. On that date, Parrett's equipment (ten-year life) had a book value of $360,000 but a fair value of $480,000. Jones had equipment (ten-year life) with a book value of $240,000 and a fair value of $350,000. Parrett used the partial equity method to record its investment in Jones. On December 31, 2011, Parrett had equipment with a book value of $250,000 and a fair value of $400,000. Jones had equipment with a book value of $170,000 and a fair value of $320,000. What is the consolidated balance for the Equipment

Explanation / Answer

Consolidated balance for the euqipment account as on december 2011 :

Excess of subsidiary Fair value ($360,000 - $250,000) = $110,000

(+) parents book value = $ 250,000

(+) subsidiary book value = $170,000

(-) Excess of amortization ($11,000* 3years) = ( $33,000 )

Consolidated balance of the equipment as on 31december 2011 = $497,000

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.