Mittelstaedt Inc., buys 60 percent of the outstanding stock of Sherry, Inc. Sherry owns a piece of land that cost $207,000 but had a fair value of $549,000 at the acquisition date. What value should be attributed to this land in a consolidated balance sheet at the date of takeover? A. $549000B. $337000C. $127200D. $421800

Question

Amiyah Griffith

Business

26 June, 16:16

Mittelstaedt Inc., buys 60 percent of the outstanding stock of Sherry, Inc. Sherry owns a piece of land that cost $207,000 but had a fair value of $549,000 at the acquisition date. What value should be attributed to this land in a consolidated balance sheet at the date of takeover? A. $549000B. $337000C. $127200D. $421800

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Porter Lucero · Answer 1

A. $549000

Explanation:

Given information

Number of outstanding stock of Sherry, Inc = 60%

The cost of the land = $207,000

Fair value at the acquisition date = $549,000

By considering the above information, the value reflected in a consolidated balance sheet is $549,000.

The historical principle says that the fixed assets should be recorded at the purchase price or acquisition cost only and the same is to be considered