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Varton Corp

question 123

Essay

Varton Corp. acquired all of the voting common stock of Caleb Co. on January 1, 2011. Varton owned some land with a book value of $84,000 that was sold to Caleb for its fair value of $120,000. How should this transaction be accounted for by the consolidated entity?


Definitions:

Equilibrium Price

The pricing point in the market where the amount of goods being sold matches the amount being sought.

Equilibrium Quantity

The level of goods or services available and needed at the price of equilibrium.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers.

Surplus

A surplus refers to the amount by which the quantity of a good produced or supplied exceeds the quantity demanded, often leading to price reductions.

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