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27 January, 07:08

On December 31, 20X9, Play Company acquired 80 percent of the common stock of Station Company. At the time, Play held land with a book value of $100,000 and a fair value of $260,000; Station held land with a book value of $600,000 and fair value of $600,000. At what amount would land be reported in a consolidated balance sheet prepared immediately after the combination?

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  1. 27 January, 07:31
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    It wil be reported for 700,000

    Explanation:

    Play is the parent company, it cannot recognize a goodwill on their own land, so it must report his land at 100,000 which is the historic cost.

    Station land has the same book value as fair value, so it will be reported as 600,000

    play land of 100,000

    + station land of 600,000

    consolidated land 700,000
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