Perth Corporation acquired a 100% interest in Sansone Company for $1,600,000 when Sansone had no liabilities
The book values and fair values of Sansone's assets were:
Book Value Fair Value
Current assets $350,000 $400,000
Equipment 150,000 210,000
Land & buildings 570,000 590,000
Total assets $1,070,000 $1,200,000
Immediately following the acquisition, equipment will be included on the consolidated balance sheet at
A) $150,000.
B) $200,000.
C) $210,000.
D) $280,000.
C
Explanation: C) The assets will be recorded at fair value. When investment cost ($1,600,000 ) exceeds the fair value of net assets ($1,200,000 ), the difference is goodwill.
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