Utah Inc Acquired All of the Outstanding Common Stock of Trimmer

question 28

Essay

Utah Inc. acquired all of the outstanding common stock of Trimmer Corp. on January 1, 2011. At that date, Trimmer owned only three assets and had no liabilities: $\begin{array}{lrrr}&\text { Book } & \text { Fair } \\&\text { Value } & \text { Value }\\\text { Inventory } & \text { \$ } 36,000 & \text { \$ } 48,000 \\\text { Equipment (5 -year life) } & 84,000 & 60,000 \\\text { Building (10 -year life) } & 120,000 & 180,000\end{array}$ If Utah paid $300,000 in cash for Trimmer, what allocation should have been assigned to the subsidiary's Building account and its Equipment account in a December 31, 2013 consolidation?

---

Definitions:

Commodities Price Index

A statistical measure that tracks the price movements of a basket of commodities to reflect the overall direction of commodity prices over time.

Economist Magazine

A leading international weekly publication focusing on current affairs, international business, politics, technology, and finance.

Cost-Benefit Analysis

A comparison of the marginal costs of a project or program with the marginal benefits to decide whether or not to employ resources in that project or program and to what extent.

Future Use

The intention or plan to deploy resources, products, or services at a later date, often considering the long-term benefits or applications.