McGuire Company Acquired 90 Percent of Hogan Company on January

question 32

Multiple Choice

McGuire Company acquired 90 percent of Hogan Company on January 1, 2014, for $234,000 cash. This amount is reflective of Hogan's total 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: $$\begin{array} { l c c } & \text { Book Value } & \text { Fair Value } \\\text { Buildings (10-year life) } & \$ 10,000 & \$ 8,000 \\\text { Equipment (4-year life) } & 14,000 & 18,000 \\\text { Land } & 5,000 & 12,000\end{array}$$ Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at December 31, 2014, what adjustment is necessary for Hogan's Land account?

• A)$8,000 decrease.
• B)$7,000 increase.
• C)$6,300 increase.
• D)$6,300 decrease.
• E)No adjustment is necessary.

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Definitions:

Primary Antibody

An antibody used in research and diagnostic applications specifically designed to bind to a particular antigen of interest.

Substrate

A surface or material on or from which an organism lives, grows, or obtains its nourishment.

Human Chorionic Gonadotropin

A hormone produced during pregnancy that supports the normal development of an egg in a woman's ovary, and stimulates the release of the egg during ovulation.

ACTH

Adrenocorticotropic hormone (ACTH) stimulates the adrenal glands to release cortisol.