McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Buildings (10-year life) Equipment (4-year life) Land Multiple Choice Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at December 31, 2023, what adjustment is necessary for Hogan's Buildings account? $1,440 increase $1,440 decrease $1,600 increase $1,600 decrease Book Value $ 10,000 14,000 5,000 No adjustment is necessary. Fair Value $8,000 18,000 12,000
McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Buildings (10-year life) Equipment (4-year life) Land Multiple Choice Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at December 31, 2023, what adjustment is necessary for Hogan's Buildings account? $1,440 increase $1,440 decrease $1,600 increase $1,600 decrease Book Value $ 10,000 14,000 5,000 No adjustment is necessary. Fair Value $8,000 18,000 12,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of
common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:
Buildings (10-year life)
Equipment (4-year life)
Land
Multiple Choice
Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.
In consolidation at December 31, 2023, what adjustment is necessary for Hogan's Buildings account?
$1,440 increase
$1.440 decrease
$1,600 increase
$1,600 decrease
Book Value
$ 10,000
14,000
5,000
No adjustment is necessary.
Fair Value
$ 8,000
18,000
12,000
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