ACME Co.paid $110,000 for the net assets of Comb Corp.At the time of the acquisition the following information was available related to Comb's balance sheet:
$$\begin{array} { l r r }
& \text { Book Value } & \text { Fair Value } \
\text { Current Assets } & \$ 50,000 & \$ 50,000 \
\text { Building } & 80,000 & 100,000 \
\text { Equipment } & 40,000 & 50,000 \
\text { Liabilities } & 30,000 & 30,000
\end{array}$$ What is the amount recorded by ACME for the Building
A)$110,000
B)$20,000
C)$80,000
D)$100,000

Question

ACME Co.paid $110,000 for the net assets of Comb Corp.At the time of the acquisition the following information was available related to Comb's balance sheet:
$$\begin{array} { l r r } 
& \text { Book Value } & \text { Fair Value } \
\text { Current Assets } & \$ 50,000 & \$ 50,000 \
\text { Building } & 80,000 & 100,000 \
\text { Equipment } & 40,000 & 50,000 \
\text { Liabilities } & 30,000 & 30,000
\end{array}$$ What is the amount recorded by ACME for the Building
A)$110,000
B)$20,000
C)$80,000
D)$100,000

Quizplus · Accepted Answer

The amount recorded for the Building should be its fair value at the time of acquisition, which is $100,000.

ACME CoPaid $110,000 for the Net Assets of Comb Corp