On January 1,20X9,Peanuts Corporation acquired 80 percent of Schulz Corporation's voting common stock.On that date,Peanuts had equipment with a book value of $50,000 and a fair value of $200,000.Schulz's buildings and equipment had a book value of $300,000 and a fair value of $300,000 at the time of acquisition.What will be the amount at which buildings and equipment will be reported in consolidated statements immediately following the acquisition?
A)$350,000
B)$340,000
C)$280,000
D)$300,000

Question

Quizplus · Accepted Answer

In a consolidated statement, assets are reported at their fair value at the acquisition date. Peanuts' equipment is adjusted to its fair value of $200,000, and Schulz's buildings and equipment remain at their fair value of $300,000. Therefore, the total is $200,000 + $300,000 = $500,000. However, since Peanuts acquired only 80% of Schulz, the consolidated amount reflects 80% of Schulz's fair value, which is $240,000. Adding Peanuts' equipment fair value, the total is $200,000 + $240,000 = $440,000.

On January 1,20X9,Peanuts Corporation Acquired 80 Percent of Schulz Corporation's