During 2021, Carla Vista Company purchased the net assets of Martinez Corporation for $219560O. On the date of the transaction, Martinez had $598800 of liabilities. The fair value of Martinez's assets when acquired were as follows: Current assets $1077840 Noncurrent assets 2514960 $3592800 How should the $798400 difference between the fair value of the net assets acquired ($2994000) and the cost ($2195600) be accounted for by Carla Vista? O The $798400 difference should be recognized as a gain. O The current assets should be recorded at $1077840 and the noncurrent assets should be recorded at $1716560.. O The $798400 difference should be credited to retained earnings. O A deferred credit of $798400 should be set'up and then amortized to income over a period not to exceed forty years.

During 2021, Carla Vista Company purchased the net assets of Martinez Corporation for $219560O. On the date of the transaction, Martinez had $598800 of liabilities. The fair value of Martinez's assets when acquired were as follows: Current assets $1077840 Noncurrent assets 2514960 $3592800 How should the $798400 difference between the fair value of the net assets acquired ($2994000) and the cost ($2195600) be accounted for by Carla Vista? O The $798400 difference should be recognized as a gain. O The current assets should be recorded at $1077840 and the noncurrent assets should be recorded at $1716560.. O The $798400 difference should be credited to retained earnings. O A deferred credit of $798400 should be set'up and then amortized to income over a period not to exceed forty years.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

During 2021, Carla Vista Company purchased the net assets of Martinez Corporation for $2195600. On the date of the transaction,
Martinez had $598800 of liabilities. The fair value of Martinez's assets when acquired were as follows:
Current assets
$1077840
Noncurrent assets
2514960
$3592800
How should the $798400 difference between the fair value of the net assets acquired ($2994000) and the cost ($2195600) be
accounted for by Carla Vista?
O The $798400 difference should be recognized as a gain.
O The current assets should be recorded at $1077840 and the noncurrent assets should be recorded at $1716560..
O The $798400 difference should be credited to retained earnings.
O A deferred credit of $798400 should be set up and then amortized to income over a period not to exceed forty years.

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