Paxton corporation acquired all of the outstanding voting stock of Stanley Compa

Question

Paxton corporation acquired all of the outstanding voting stock of Stanley Company. How should the assets and liabilities of the acquired company be reported on the consolidated financial statements immediately after the acquisition

a)Nominal estimated values determined by the parent company.

Market values on the date of the acquisition.

The previously reported book values.

Market values on the date of the acquisition less accumulated depreciation.

a)Nominal estimated values determined by the parent company.

Market values on the date of the acquisition.

The previously reported book values.

Market values on the date of the acquisition less accumulated depreciation.

Explanation / Answer

Paxton corporation acquired all of the outstanding voting stock of Stanley Company. How should the assets and liabilities of the acquired company be reported on the consolidated financial statements immediately after the acquisition

b) Market values on the date of the acquisition.

Note : In consoldiation, 100% holding , Asset & Liability should be reported at fair value on the date of acquisition therefore assets and liabilities of the acquired company be reported on the consolidated financial statements immediately after the acquisition at Market values on the date of the acquisition.

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