McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Buildings (10-year life) Equipment (4-year life) Land Multiple Choice Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at December 31, 2023, what adjustment is necessary for Hogan's Buildings account? $1,440 increase $1,440 decrease $1,600 increase $1,600 decrease Book Value $ 10,000 14,000 5,000 No adjustment is necessary. Fair Value $8,000 18,000 12,000

McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Buildings (10-year life) Equipment (4-year life) Land Multiple Choice Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at December 31, 2023, what adjustment is necessary for Hogan's Buildings account? $1,440 increase $1,440 decrease $1,600 increase $1,600 decrease Book Value $ 10,000 14,000 5,000 No adjustment is necessary. Fair Value $8,000 18,000 12,000

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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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

McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of
common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:
Buildings (10-year life)
Equipment (4-year life)
Land
Multiple Choice
Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.
In consolidation at December 31, 2023, what adjustment is necessary for Hogan's Buildings account?
$1,440 increase
$1.440 decrease
$1,600 increase
$1,600 decrease
Book Value
$ 10,000
14,000
5,000
No adjustment is necessary.
Fair Value
$ 8,000
18,000
12,000

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