Question

On January 1, 2020, Grand Haven, Inc., reports net assets of $880,250 although equipment (with a four-year remaining life) having a book value of $449,000 is worth $521,250 and an unrecorded patent is valued at $46,350. Van Buren Corporation pays $799,080 on that date to acquire an 80 percent equity ownership in Grand Haven. If the patent has a remaining life of nine years, at what amount should the patent be reported on Van Buren's consolidated balance sheet at December 31, 2021

Answer 1

Answer:

$46,350

Explanation:

The Patent is Acquired at the Fair Value at the Acquisition date. They are recognized in consolidated financial statement even when not recorded by the subsidiary for consolidation purposes.

Thus, the patent be reported on Van Buren's consolidated balance sheet at December 31, 2021 is $46,350.