Bailey, Inc. problem
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Chapter 4 Problem 1
Bailey, Inc., buys 60 percent of the outstanding stock of Luebs, Inc., in a purchase that resulted in the recognition of goodwill. Luebs owns a piece of land that cost $200,000 but was worth $500,000 at the date of purchase. For each of the three concepts described in this chapter, what value would be attributed to this land in a consolidated balance sheet at the date of takeover?
Economic Proportionate Parent Company
Unit Concept Consolidation Concept
a. $500,000 $300,000 $500,000
b. $200,000 $120,000 $500,000
c. $200,000 $120,000 $380,000
d. $500,000 $300,000 $380,000
Please show calculation.
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Bailey, Inc., buys 60 percent of the outstanding stock of Luebs, Inc., in a purchase that resulted in the recognition of goodwill. Luebs owns a piece of land that cost $200,000 but was worth $500,000 at the date of purchase. For each of the three concepts described in this chapter, what value would be attributed to this land in a consolidated balance sheet at the date of takeover?
Economic Proportionate Parent Company
Unit Concept Consolidation Concept
a. $500,000 300,000 $500,000
b. $200,000 $120,000 $500,000
c. $200,000 ...
Purchase this Solution
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