Question - Tarp Company acquired 90% of Loud Company on January 1, 20X3, for $234,000 cash. Loud's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Loud's net assets revealed the following.
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Book Value
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Fair Value
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Buildings (10-year life)
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$10,000
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$8,000
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|
Equipment (4-year life)
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$14,000
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$18,000
|
|
Land
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$5,000
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$12,000
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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, 20X3, what adjustment is necessary for Loud's equipment account?