Goehler, Inc. acquires all of the voting stock of Kenneth, Inc. on January 4, 2017, at an amount in excess of Kenneth's fair val
ue. On that date, Kenneth has equipment with a book value of $90,000 and a fair value of $120,000 (10-year remaining life). Goehler has equipment with a book value of $800,000 and a fair value of $1,200,000 (10-year remaining life). On December 31, 2018, Goehler has equipment with a book value of $975,000 but a fair value of $1,350,000 and Kenneth has equipment with a book value of $105,000 but a fair value of $125,000.
1. If Goehler applies the equity method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2018?
a. $1,104,000.
b. $1,080,000.
c. $1,468,000.
d. $1,475,000.
e. $1,100,000.
2. If Goehler applies the partial equity method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2018?
a. $1,475,000.
b. $1,080,000.
c. $1,468,000.
d. $1,100,000.
e. $1,104,000.
3. If Goehler applies the initial value method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2018?
a. $1,080,000.
b. $1,104,000.
c. $1,475,000.
d. $1,100,000.
e. $1,468,000.
