Mcguire company acquired 90 percent of hogan company on

Reference no: EM13574760

McGuire Company acquired 90 percent of Hogan Company on January 1, 2010, for $234,000 cash. This amount is reflective of Hogan's total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

	Book Value	Fair Value
Buildings (10 year life)	$10,000	$8,000
Equipment (4 year life)	14,000	18,000
Land	5,000	12,000

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.

In consolidation at December 31, 2010, what adjustment is necessary for Hogan's Equipment account?

a) $3,000 increase

b) $3,000 decrease

c) $2,700 increase

d) $2,700 decrease

e) No adjustment necessary

Reference no: EM13574760

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