Cosby Corporation acquired 60 percent of Huxtable Corporation's voting common stock.Huxtable's buildings and equipment had a book value of $200,000 and a fair value of $250,000 at the time of the acquisition.What will be the amount at which Huxtable's buildings and equipment will be reported in consolidated statements on the acquisition date?
A) $150,000
B) $200,000
C) $230,000
D) $250,000

Question

Quizplus · Accepted Answer

When a parent company acquires a subsidiary, the consolidated financial statements should reflect the assets of the subsidiary at their fair value on the acquisition date. In this case, Huxtable's buildings and equipment had a fair value of $250,000 at the time of acquisition, so that amount should be reported on the consolidated statements. Therefore, the answer is D, $250,000.

Cosby Corporation Acquired 60 Percent of Huxtable Corporation's Voting Common