Question

On December 31, 2003, Rudd Company purchased 80 percent of the common stock of Wilton Company. At the time, Rudd held land with a book value of $100,000 and a fair value of $260,000; Wilton held land with a book value of $50,000 and fair value of $600,000. At what amount would land be reported in a consolidated balance sheet prepared immediately after the combination?

a. $540,000.

b. $590,000.

c. $700,000.

d. $860,000.

Answer 1

land will be reported in a consolidated balance sheet at c. $700,000.

Step-by-step explanation:

The Assets and Liabilities of Wilton Company are acquired at their Fair Value amounts instead of Book Values. Thus, the value of the land will be : $700,00 ($100,000 + $600,000).