Question 8 Velvet Underground Corp. acquired Jasper Inc. on January 1, 2012. The parent paid more than the fair value of the subsidiary's net assets. On that date, Velvet had equipment with a book value of $500,000 and a fair value of $640,000. Jasper had equipment with a book value of $400,000 and a fair value of $470,000. Jasper decided to use push-down accounting. Immediately after the acquisition, what Equipment amount would appear on Jasper's separate balance sheet and on Velvet's consolidated balance sheet, respectively? A) $400,000 and $900,000 B) $400,000 and $970,000 C) $470,000 and $900,000 D) $470,000 and $970,000 E) $470,000 and $1,040,000 Question 9 Parent Corp. acquired one hundred percent of Joker Inc. on January 1, 2011, at a price in excess of the subsidiary's fair value. On that date, Parent's equipment (ten-year life) had a book value of $360,000 but a fair value of $480,000. Joker had equipment (ten-year life) with a book value of $240,000 and a fair value of $350,000. Parent used the partial equity method to record its investment in Joker. On December 31, 2013, Parent had equipment with a book value of $250,000 and a fair value of $400,000. Joker had equipment with a book value of $170,000 and a fair value of $320,000. What is the consolidated balance for the Equipment account as of December 31, 2013? A) $387,000. B) $497,000. C) $508.000. D) $537,000. E) $570,000.
Question 8 Velvet Underground Corp. acquired Jasper Inc. on January 1, 2012. The parent paid more than the fair value of the subsidiary's net assets. On that date, Velvet had equipment with a book value of $500,000 and a fair value of $640,000. Jasper had equipment with a book value of $400,000 and a fair value of $470,000. Jasper decided to use push-down accounting. Immediately after the acquisition, what Equipment amount would appear on Jasper's separate balance sheet and on Velvet's consolidated balance sheet, respectively? A) $400,000 and $900,000 B) $400,000 and $970,000 C) $470,000 and $900,000 D) $470,000 and $970,000 E) $470,000 and $1,040,000 Question 9 Parent Corp. acquired one hundred percent of Joker Inc. on January 1, 2011, at a price in excess of the subsidiary's fair value. On that date, Parent's equipment (ten-year life) had a book value of $360,000 but a fair value of $480,000. Joker had equipment (ten-year life) with a book value of $240,000 and a fair value of $350,000. Parent used the partial equity method to record its investment in Joker. On December 31, 2013, Parent had equipment with a book value of $250,000 and a fair value of $400,000. Joker had equipment with a book value of $170,000 and a fair value of $320,000. What is the consolidated balance for the Equipment account as of December 31, 2013? A) $387,000. B) $497,000. C) $508.000. D) $537,000. E) $570,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 8
Velvet Underground Corp. acquired Jasper Inc. on January 1, 2012. The parent paid more
than the fair value of the subsidiary's net assets. On that date, Velvet had equipment with a
book value of $500,000 and a fair value of $640,000. Jasper had equipment with a book
value of $400,000 and a fair value of $470,000. Jasper decided to use push-down
accounting. Immediately after the acquisition, what Equipment amount would appear on
Jasper's separate balance sheet and on Velvet's consolidated balance sheet, respectively?
A) $400,000 and $900,000
B) $400,000 and $970,000
C) $470,000 and $900,000
D) $470,000 and $970,000
E) $470,000 and $1,040,000
Question 9
Parent Corp. acquired one hundred percent of Joker Inc. on January 1, 2011, at a price in
excess of the subsidiary's fair value. On that date, Parent's equipment (ten-year life) had a
book value of $360,000 but a fair value of $480,000. Joker had equipment (ten-year life)
with a book value of $240,000 and a fair value of $350,000. Parent used the partial equity
method to record its investment in Joker. On December 31, 2013, Parent had equipment
with a book value of $250,000 and a fair value of $400,000. Joker had equipment with a
book value of $170,000 and a fair value of $320,000. What is the consolidated balance for
the Equipment account as of December 31, 2013?
A) $387,000.
B) $497,000.
C) $508.000.
D) $537,000.
E) $570,000.
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