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lara [203]
3 years ago
11

High acquires 100% of Low on January 1, 2018 in a transaction structured as an acquisition. At acquisition date, both High and L

ow have buildings with a fair value different than book value and a remaining useful life of 5 years. The following information is available.
Building
Book Value Fair Value
January 1, 2018
High 800,000 700,000
Low 400,000 600,000
December 31, 2020
High 1,500,000 1,700,000
Low. 900,000 1,200,000
How much is consolidated Building at December 31, 2020?
a) $2,520,000
b) $2,480,000
c) $1,320,000
d) $2,600,000
Business
1 answer:
jek_recluse [69]3 years ago
5 0

Answer: $2,480,000

Explanation:

The amount of consolidated Building at December 31, 2020 will be:

Book value of High by Dec. 2020 = 1,500,000

Add: Book value of low by Dec. 2020 = 900,000

Add: Increase in fair value = (600000 - 400000) = 200000

Less: Incremental depreciation = 200,000 × 3/5 = 120,000

Consolidated building = 1,500,000 + 900,000 + 200,000 - 120,000

= 2,480,000

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