Chapter_4_day_1_solutions

Chapter_4_day_1_solutions - Answers to Problems 1. D The...

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Unformatted text preview: Answers to Problems 1. D The acquisition method consolidates assets at fair value at acquisition date regardless of the parents percentage ownership. 2. D In consolidating the subsidiary's figures, all intercompany balances must be eliminated in their entirety for external reporting purposes. Even though the subsidiary is less than fully owned, the parent nonetheless controls it. 3. C An asset acquired in a business combination is initially valued at 100% acquisition-date fair value and subsequently amortized its useful life. Patent fair value at January 1, 2009................................................ $45,000 Amortization for 2 years (10 year life)............................................. (9,000 ) Patent reported amount December 31, 2010.................................. $36,000 4. A Plaster building................................................................................. $510,000 Turner building acquisition-date fair value $300,000 Amortization for 3 years (10-year life) (90,000 ) 210,000 Consolidated buildings ................................................................... $720,000-OR- Plaster building................................................................................. $510,000 Turner building 12/31/11 $182,000 Excess acquisition-date fair value allocation 40,000 Excess amortization for 3 years (10-year life) (12,000 ) 210,000 Consolidated buildings ................................................................... $720,000 5. C Hygille expense................................................................................. $621,000 Nuyt expenses...................................................................................Nuyt expenses....
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This note was uploaded on 04/05/2010 for the course ACCY 260 taught by Professor Yu during the Spring '10 term at Ferrum.

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Chapter_4_day_1_solutions - Answers to Problems 1. D The...

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