Utah Inc Acquired All of the Outstanding Common Stock of Trimmer

question 27

Essay

Utah Inc. acquired all of the outstanding common stock of Trimmer Corp. on January 1, 2019. At that date, Trimmer owned only three assets and had no liabilities: If Utah paid $300,000 in cash for Trimmer, what allocation and amortization should have been assigned to the subsidiary's Building account and its Equipment account in a December 31, 2021 consolidation?

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Definitions:

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Shareholders' Equity

Shareholders' equity represents the residual interest in the assets of a corporation after deducting its liabilities, indicating the ownership interest of the shareholders.

2-For-1 Stock Split

A corporate action where a company doubles its number of outstanding shares, halving the stock price, effectively giving shareholders two shares for every one they owned.

Cancellation

The act of nullifying or terminating a previously established agreement or contract.