McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash....
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Accounting
McGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective of Hogans total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:
Book Value
Fair Value
Buildings (10-year life)
$ 10,000
$ 8,000
Equipment (4-year life)
14,000
18,000
Land
5,000
12,000
Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.
In consolidation at January 1, 2022, what adjustment is necessary for Hogan's Patent account?
Multiple Choice
No adjustment is necessary.
$7,000
$6,300
$9,900
$11,000
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