Red CoAcquired 100% of Green, Inc

question 79

Multiple Choice

Red Co.acquired 100% of Green, Inc.on January 1, 2017.On that date, Green had land with a book value of $42,000 and a fair value of $52,000.Also, on the date of acquisition, Green had a building with a book value of $200,000 and a fair value of $390,000.Green had equipment with a book value of $350,000 and a fair value of $280,000.The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life.How much total expense will be in the consolidated financial statements for the year ended December 31, 2017 related to the acquisition allocations of Green?

• A) $43,000.
• B) $33,000.
• C) $ 5,000.
• D) $15,000.
• E) $0.

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Definitions:

Factory Overhead Cost

Manufacturing expenses, except for direct materials and direct labor costs.

Direct Materials

Raw materials that are directly traceable to the production of a specific product.

Manufactured Product

Items that have been produced from raw materials through a process involving labor and machinery, making them ready for sale.

Managerial Accounting

The act of detecting, assessing, scrutinizing, and sharing economic information with executives to help in reaching the goals of an organization.