Mittelstaedt Inc., buys 60 percent of the outstanding stock of Sherry, Inc. Sherry owns a piece of land that cost $207,000 but h

Question

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Mittelstaedt Inc., buys 60 percent of the outstanding stock of Sherry, Inc. Sherry owns a piece of land that cost $207,000 but h

ad 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

Business

1 answer:

vovikov84 [41] · Answer 1 · 2022-08-10T14:06:08+03:00

Answer:

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