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 account as of December 31, 2011?

Explanation / Answer

Consolidated balance of equipment Excess value at the acquisition 110000 (350000-240000) Book value as on Dec 31 20111 of Jones 170000 Book value as on Dec 31 2011 of PArent 250000 Less: excess depreciation (110000/10*3) -33000 Consolidated balance of equipment 497000 ans

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