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.Goehler, Inc. acquires all of the voting stock of Kenneth, Inc. on January 4, 2017, at an amount in excess of Kenneth's fair value. On that date, Kenneth has equipment with a book value of $90,000 and a fair value of $120,000 (10-year remaining life). Goehler has equipment with a book value of $800,000 and a fair value of $1,200,000 (10-year remaining life). On December 31, 2018, Goehler has equipment with a book value of $975,000 but a fair value of $1,350,000 and Kenneth has equipment with a book value of $105,000 but a fair value of $125,000. If Goehler applies the equity method in accounting for Kenneth, what is the consolidated balanc e for the Equipment account as of December 31, 2018

Respuesta :

Answer:

$1,104,000

Explanation:

The computation of the consolidated valance of the equipment account as on Dec 31, 2018 is shown below:

As per the data given in the question,

Particulars                                  Amount

Equipment with a book value  $975,000

Add: Kenneth Equipment =               $105,000

Add: Original purchase price for Kenneth = $120,000 - $90,000 = $30,000

Less: Amortization of allocation = ($30,000 × 2) ÷ 10 = $6,000

Consolidated balance for equipment   $1,104,000

We simply added the

= $975,000 + $105,000 + $30,000 - $6,000

= $1,104,000

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