Question & Answer: n fair value of the subsidiary's net assets. On the acquisition date, Crawford has equipm…..

Acct 402 12th Dev: AcCT CCOUNTING hapter 3 Question 3 (of 8 value: 3.00 points The parent pays more for it than the fair value of the $454,000 and Crawford Corporation acquires Nashville, Inc. subsidiarys net assets. On the acquisition date, Crawford has equipment with a book value of a fair value of $621,000. Nashville has equipment with a book value of $340,000 and a fair value of 406,500. Nashville is going to use push-down accounting. Immediately after the acquisition, what amounts in the Equipment account appear on Nashvilles separate balance sheet and on the consolidated balance sheet? O $406,500 and $1,027500. $340,000 and $794,000. O $406,500 and $860,500 O $340000 and $961,000. References eBook& Resources Multiple Choice Difficulty: Easy Learning Ob and when its Chesk my work here to search

Crawford Corporation acquires Nashville, Inc. The parent pays more for it than fair value of the subsidiary’s net assets. On the acquisition date, Crawford has equipment with a book value of $454,000 and fair value of $621,000. Nashville has equipment with a book value of $340,000 and a fair value of $406, 500. Nashville is going to use push-down accounting. Immediately after the acquisition, what amounts in the Equipment account appear on Nashville’s separate balance sheet and on the consolidated balance sheet? $406, 500 and $1, 027, 500. $340,000 and $794,000. $406, 500 and $860, 500. $340,000 and $961,000.

Expert Answer

Ans. $406,500 and $860,500

Explanation:- In push down Accounting method ,the parent company acquires the subsidiary company at fair value. So the subsidiary company has to update its books on fair value and the same affect would be given on consolidate balance sheet. So immediately after the aquisition, in the books of Nashville,The amount of equipment will be – $406,500 & in consolidated balance sheet it will be :- $406,500+$454,000=$860,500

So the answer would be – 3rd point i.e. $406,500 and $860,500

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