McGuire Company Acquired 90 Percent of Hogan Company on January

question 9

Multiple Choice

McGuire company acquired 90 percent of Hogan Company on January 1, 2010, 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 January 1, 2010, what adjustment is necessary for Hogan's Patent account?

• A) $7,000.
• B) $6,300.
• C) $11,000.
• D) $9,900.
• E) No adjustment is necessary.

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Definitions:

Post-Formal Thought

A stage of cognitive development proposed to follow Piaget's formal operational stage, characterized by an understanding that truth may vary from situation to situation.

Integrative

Relating to, characterized by, or promoting integration, especially in bringing together different areas of study or social groups.

Interrogative

Relating to or conveying a question.

Bridge Employment

A form of employment that occurs after retirement but before complete withdrawal from the workforce, often part-time or in a different field of work.