Question

MacHeath Inc. bought 60% of the outstanding common stock of Nomes Inc. in an acquisition that resulted in the recognition of goodwill. Nomes owned a piece of land that cost $250,000 but was worth $600,000 at the date of acquisition.
What value would be attributed to this land in a consolidated balance sheet at the date of acquisition?

a) $250,000. b) $150,000. c) $600,000. d) $360,000. e) $460,000.

Answer 1

Answer:

c) $600,000.

Explanation:

$600,000.00 is the value that will be attributed to land in a consolidated balance sheet at the date of acquisition?

In the acquisition process,  assets and liabilities of the business being bought get evaluated to ascertain their true worth.  Assets such as land, buildings, and machinery undergo valuation. Their market value or fair value is recorded in the books of the acquiring entity as the actual value of the asset at the time of acquisition.