Question: Bailey, Inc., buys 60 percent of the outstanding stock of Luebs, Inc., in a purchase that resulted in the recognition of goodwill. Luebs owns a piece of land that cost $200,000, but was worth $500,000 at the date of purchase. What value would be attributed to this land in a consolidated balance sheet at the date of takeover?
Economic Proportionate Parent Company
Unit Concept Consolidation Concept
a. $500,000 300,000 $500,000
b. $200,000 $120,000 $500,000
c. $200,000 $120,000 $380,000
d. $500,000 $300,000 $380,000