Crawford Corporation acquires Nashville, Inc. The parent pays more for it than t
ID: 2464696 • Letter: C
Question
Crawford Corporation acquires Nashville, Inc. The parent pays more for it than the fair value of the subsidiary’s net assets. On the acquisition date, Crawford has equipment with a book value of $425,000 and a fair value of $624,000. Nashville has equipment with a book value of $333,500 and a fair value of $418,500. 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?
$418,500 and $843,500.
$333,500 and $758,500.
$418,500 and $1,042,500.
$333,500 and $957,500.
Explanation / Answer
$418500 and $843500 Ans The $85000 (418500-333500) excess at acquistion date fair value allocation is pushed down to Nashville which is a subsidary as it is using push down accounting thereby the balance of equipment is increased to $418500 in its books and the consolidated balanceis $ 843500 which is addition of book value of Crawford (Parent) and fair value of subsidary=$425000+418500