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

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