Question

In an acquisition where control is achieved, how would the land accounts of the parent and the land accounts of the subsidiary be combined?

A) Parent - Book Value
Subsidiary - Book Value
B) Parent - Book Value
Subsidiary - Fair Value
C) Parent - Fair Value
Subsidiary - Fair Value
D) Parent - Fair Value
Subsidiary - Book Value
E) Parent - Cost
Subsidiary - Cost

Answer 1

In an acquisition where control is achieved, the land accounts of the parent and the subsidiary would be combined using the Parent - Fair Value and Subsidiary - Fair Value approach.

Step-by-step explanation:

In an acquisition where control is achieved, the land accounts of the parent and the subsidiary would be combined using the Parent - Fair Value and Subsidiary - Fair Value approach. In an acquisition where control is achieved, the land accounts of the parent and the subsidiary would be combined using the Parent - Fair Value and Subsidiary - Fair Value approach.

This means that the land accounts of both the parent company and the subsidiary would be recorded at their fair values at the time of the acquisition.

By using fair values, the combined land account reflects the current market value of the land held by both the parent and the subsidiary.