Utah IncAcquired All of the Outstanding Common Stock of Trimmer Corp

question 48

Essay

Utah Inc.acquired all of the outstanding common stock of Trimmer Corp.on January 1,2009.At that date,Trimmer owned only three assets and had no liabilities:
$\begin{array} { l r r } & \begin{array} { r } \text { Book } \\\underline{\text { Value }}\end{array} & \begin{array} { r } \text { Fair } \\\underline{\text { Value }}\end{array} \\\text { Inventory } & \$ 36,000 & \$ 48,000 \\\text { Equipment (5-year life) } & 84,000 & 60,000 \\\text { Building (10-year life) } & 120,000 & 180,000\end{array}$
-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 31,2011 consolidation?
Since Utah paid more than the $288,000 fair value of Trimmer's net assets,all allocations are based on fair value with the excess $12,000 assigned to goodwill.

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Definitions:

Hiring And Training Cost

Expenses incurred in recruiting and equipping new employees with the necessary skills and knowledge for their roles.

Labor Hours

The total number of work hours contributed by employees for productive activities over a specified period.

Inventory Holding Cost

The total cost associated with keeping inventory in stock, including storage, insurance, taxes, depreciation, and opportunity costs.

Forward Buying

A procurement strategy where a company purchases goods in advance to take advantage of favorable pricing or to hedge against future price increases and supply shortages.