Ask Question
22 August, 12:52

Papa Company acquired land with an office building on it from its subsidiary, Sonny Company, for $110,000. Prior to the sale, Sonny's carrying value of the land was $60,000 and its net carrying value of the building was $50,000. At the time of the transaction, Papa appropriately determined that the land had a fair value of $75,000 and the building had a fair value of $35,000. At what amount should the land and building be reported on Papa's consolidated statements prepared immediately after the transaction?

Land Building

A) $75,000 $35,000

B) $55,000 $55,000

C) $60,000 $50,000

+1
Answers (1)
  1. 22 August, 16:18
    0
    C) $60,000 $50,000

    Explanation:

    In the consolidated balance sheet, the assets of Papa Company must be recognized for their book value, not their fair value. Since the acquisition was 110,000 with distribution in Sonny Company of 60,000 for the land and 50,000 for the building, that distribution must be maintained.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Papa Company acquired land with an office building on it from its subsidiary, Sonny Company, for $110,000. Prior to the sale, Sonny's ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers