ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's
|
|
Book Value |
Fair Value |
|
Current Assets |
$50,000 |
$ 50,000 |
|
Building |
80,000 |
100,000 |
|
Equipment |
40,000 |
50,000 |
|
Liabilities |
30,000 |
30,000 |
What is the amount recorded by ACME for the Building?
|
a. |
$110,000 |
|
b. |
$20,000 |
|
c. |
$80,000 |
|
d. |
$100,000 |
Consolidated Financial Statement
Financial statements for a group that is presented as a single economic activity are known as "consolidated financial statements" and are used to illustrate the organization's overall financial situation. If one company buys over 50% of the voting or share capital of another, that firm becomes the acquiring company's parent company, and the acquired company is referred to as the parent company's subsidiary. Creating consolidated financial accounts is the parent company's responsibility.
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