Asked by Brianna Austin on Jun 17, 2024
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On April 1,2020,Paxton Corporation acquired all of the outstanding voting common stock of Stanley Company and Stanley will remain a separate corporation.Stanley's year-end is December 31.How should the assets and liabilities of Stanley be reported on the consolidated financial statements when Stanley is combined with Paxton on April 1,2020?
A) At book values at the April 1,2020 date of acquisition.
B) At fair values at the April 1,2020 date of the acquisition.
C) At book values at December 31,2019.
D) At fair values at December 31,2019 less accumulated depreciation calculated on the difference between book and fair values since that date.
Consolidated Financial Statements
Financial statements that aggregate the financial condition and operations of a parent company and its subsidiaries into one document, as if they were a single entity.
Book Values
The value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus any depreciation.
Fair Values
The amount one would expect to get from selling an asset or the cost to transfer a liability, in a structured deal involving participants in the market on the date it's evaluated.
- Comprehend the effects of possessing various proportions of voting shares on financial consolidation and reporting.
Verified Answer
Learning Objectives
- Comprehend the effects of possessing various proportions of voting shares on financial consolidation and reporting.
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