The Value of Equipment on A Consolidated Balance Sheet
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C. Pepsi Company paid $2M for the net assets of Coca Cola. Coca Cola was then dissolved. Coca Cola had no liabilities and the fair value of Coca Colas assets was $2.5M. Coca Cola's only non-current assets were land with a fair value of $160K and equipment with fair value of $640K. At what value will Coca Cola's equipment be recorded by Pepsi? Why?
-$640K
-$240K
-$400k
-$0
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Solution Summary
Citing the relevant authority, this solution discusses the way to report the value of equipment acquired in a business combination on the consolidated balance sheet.
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The equipment will be valued at $640,000, its fair market value. FASB SFAS 141(R) states that "This Statement applies to all transactions or other events in which an entity (the acquirer) ...
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