A parent company acquired an 80% interest in a subsidiary on January 1, 2015, at a price high enough to result in goodwill. Included in the assets of the subsidiary are inventory with a book value of $50,000 and a fair value of $55,000 and equipment with a book value of $100,000 and a fair value of $160,000. The equipment has a 5-year remaining life. What impact would the inventory and equipment, acquired in the acquisition, have on consolidated net income in 2015 and 2016?

A parent company acquired an 80% interest in a subsidiary on January 1, 2015, at a price high enough to result in goodwill. Included in the assets of the subsidiary are inventory with a book value of $50,000 and a fair value of $55,000 and equipment with a book value of $100,000 and a fair value of $160,000. The equipment has a 5-year remaining life. What impact would the inventory and equipment, acquired in the acquisition, have on consolidated net income in 2015 and 2016?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PB: On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received...

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