The net amount appearing on Big Guy's consolidated balance sheet for Equipment as at June 30, 2020 would be:
A) $872,000.
B) $878,600.
C) $881,800.
D)$885,000.

Question

Quizplus · Accepted Answer

We need to calculate the consolidated balance for Equipment. 
Big Guy had Equipment of $520,000 and had accumulated depreciation of $68,000 on June 30, 2020. 
Small Co had Equipment of $320,000 and had accumulated depreciation of $32,000 on June 30, 2020. 
Therefore, the net Equipment balance for Big Guy and Small Co combined is:

$520,000 - $68,000 + $320,000 - $32,000 = $740,000

However, we also know that Small Co has a fair value adjustment of $90,000 to its Equipment. We need to add this adjustment to the net equipment balance to get the consolidated balance:

$740,000 + $90,000 = $830,000

Lastly, we need to consider the $51,800 of depreciation expense that was allocated to Equipment by Small Co during the year. This amount reduces the consolidated balance for Equipment:

$830,000 - $51,800 = $778,200

Therefore, the consolidated net amount appearing on Big Guy's balance sheet for Equipment as at June 30, 2020 is $881,800 (Option C).

The Net Amount Appearing on Big Guy's Consolidated Balance Sheet