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# 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

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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 ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment of more than 300 words of text.

\$2.19