Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2020. At that date, Glen owns only three assets and has no liabilities: Book Value Fair Value Land $ 40,000 $ 50,000 Equipment (10-year life) 80,000 75,000 Building (20-year life) 200,000 300,000 If Watkins pays $450,000 in cash for Glen, what amount would be represented as the subsidiary’s Building in a consolidation at December 31, 2022, assuming the book value of the building at that date is still $200,000?
Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2020. At that date, Glen owns only three assets and has no liabilities: Book Value Fair Value Land $ 40,000 $ 50,000 Equipment (10-year life) 80,000 75,000 Building (20-year life) 200,000 300,000 If Watkins pays $450,000 in cash for Glen, what amount would be represented as the subsidiary’s Building in a consolidation at December 31, 2022, assuming the book value of the building at that date is still $200,000?
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Question
Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2020. At that date, Glen owns only three assets and has no liabilities:
Book Value |
Fair Value |
|||||
Land | $ | 40,000 | $ | 50,000 | ||
Equipment (10-year life) | 80,000 | 75,000 | ||||
Building (20-year life) | 200,000 | 300,000 | ||||
If Watkins pays $450,000 in cash for Glen, what amount would be represented as the subsidiary’s Building in a consolidation at December 31, 2022, assuming the book value of the building at that date is still $200,000?
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