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goblinko [34]
3 years ago
5

Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2012. On that date, Paar's equipment (10-year life) has a boo

k value of $420,000 but a fair value of $520,000. Kimmel has equipment (10-year life) with a book value of $272,000 but a fair value of $400,000. Paar uses the equity method to record its investment in Kimmel. On December 31, 2014, Paar has equipment with a book value of $294,000 but a fair value of $445,200. Kimmel has equipment with a book value of $190,400 but a fair value of $357,000. What is the consolidated balance for the Equipment account as of December 31, 2014?
A. $612,600.
B. $574,000.
C. $802,200.
D. $484,400.
Business
1 answer:
RoseWind [281]3 years ago
8 0

Answer:

B)  574,000

Explanation:

Equipment book of Paar value on december 31/14 of $294,000.-  

Add Kimmels equipment book value on december 31/14 of $190,00

Add original acquisition-date allocation to Kimmel´s equipment of ($400,000 - $272,000) = $128,000

Less Amortization of alloction ($128,000 / 10 years for 3 years) = (38,400)

Eqcuals consolidated equipment of $574,000

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Answer:

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The answer is A and B respectively

Explanation:

The standalone risk or standard deviation of the stocks is alleviated for a well diversified investor  . So, in that case, the relevant risk would be the market risk or the beta.

When you see in isolation, relevant risk would be the standard deviation.

Therefore, as a risk minimizer : Stock A  has the lowest standard deviation, thus, it should be chosen, if it is to be held in isolation . Also stock B  has the lowest beta, thus,it should be chosen, if it is to be held as part of a well - diversified portfolio.

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ziro4ka [17]
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Anton [14]

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