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18 February, 01:59

Parrett Corp. acquired one hundred percent of Jones Inc. on January 1, 2018, at a price in excess of the subsidiary's fair value. On that date, Parrett's equipment (ten-year life) had a book value of $360,000 but a fair value of $480,000. Jones had equipment (ten-year life) with a book value of $240,000 and a fair value of $350,000. Parrett used the equity method to record its investment in Jones. On December 31, 2018, Parrett had equipment with a book value of $250,000 and a fair value of $400,000. Jones had equipment with a book value of $200,000 and a fair value of $320,000. What is the consolidated balance for the Equipment account as of December 31, 2018

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  1. 18 February, 02:36
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    Consolidated Balance for the Equipment = $527,000

    Explanation:

    given data

    January 1, 2018

    Parrett book value = $360,000

    fair value = $480,000

    Jones book value = $240,000

    fair value = $350,000

    December 31, 2018

    Parrett book value of $250,000

    fair value of $400,000

    Jones book value = $200,000

    fair value = $320,000

    solution

    we Consolidate here Balance for the Equipment that is as

    first we take Jones 's Equipment that is

    Jones 's Equipment = $350,000 - $240,000

    Jones 's Equipment = $110,000.00 ... 1

    and

    Parrett Equipment Book value = $250,000.00 ... 2

    Jones Equipment Book Value = $200,000.00 ... 3

    so that Excess Amortization will be

    Excess Amortization = ($110,000 : 10 years) * 3 year

    Excess Amortization = $33,000.00 ... 4

    Consolidated Balance for the Equipment will be

    Consolidated Balance for the Equipment = $110,000.00 + $250,000.00 + $200,000.00 - $33,000.00

    Consolidated Balance for the Equipment = $527,000
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