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: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 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, 2022, what net adjustment is necessary for Hogan's Patent account? Multiple Choice $5,600 $8,800 $7,000 $7,700 No adjustment is necessary.
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: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 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, 2022, what net adjustment is necessary for Hogan's Patent account? Multiple Choice $5,600 $8,800 $7,000 $7,700 No adjustment is necessary.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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: Book Value
Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 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, 2022, what net adjustment is necessary for Hogan's Patent account? Multiple Choice
$5,600
$8,800
$7,000
$7,700
No adjustment is necessary.
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