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AB acquired its one subsidiary, CD, on 1 January 20X1. At this date the fair value of CD's property, plant and equipment was found to be $40 million higher than its carrying value. The relevant items had a remaining estimated useful life of 10 years from the date of acquisition.
At 31 December 20X4 AB and CD presented property, plant and equipment of $100 million and $50 million respectively in their individual financial statements.
The value of property, plant and equipment presented in AB's consolidated statement of financial position at 31 December 20X4 is:
Suggested Answer: A
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29 comments · newest first
RE
Remona
10 months ago
Totally agree, $190M makes sense!
DO
Dorothea
10 months ago
Wait, are we sure about that $40M? Seems high.
KA
Kati
10 months ago
So that's $190M total, right?
RA
Raul
11 months ago
Don't forget the $40M fair value adjustment!
PE
Pearlie
11 months ago
AB's PPE is $100M, CD's is $50M.
DA
Dalene
11 months ago
I feel like the fair value increase should be spread over the useful life, but I'm confused about how that affects the final total in the consolidated statement.
HE
Hermila
11 months ago
This question reminds me of a practice problem where we had to calculate the consolidated figures after a few years. I think we might need to deduct some depreciation from that fair value adjustment.
CO
Coletta
12 months ago
I think we need to add the fair value adjustment to AB's property, plant and equipment, but I can't recall the exact calculation method.
FL
Florinda
12 months ago
I remember we discussed how to adjust the fair value of assets during acquisitions, but I'm not sure how to apply it here.
BL
Blair
12 months ago
I feel confident I can solve this. The information provided gives me what I need to calculate the consolidated property, plant, and equipment value.
CL
Clay
1 year ago
Hmm, I'm a bit unsure about how to handle the individual financial statements versus the consolidated statement. I'll need to review that part carefully.
NA
Nan
1 year ago
I think I've got it. The key is remembering to amortize the fair value adjustment over the remaining useful life.
GO
Goldie
1 year ago
Okay, let's break this down step-by-step. We need to calculate the fair value adjustment and then figure out the consolidated value.
CA
Carole
1 year ago
This question seems straightforward, but I want to make sure I understand the details before answering.
JE
Jenelle
1 year ago
I'm not sure, but I think the answer might be B) $190 million, considering the fair value adjustment and the individual financial statements of AB and CD.
CA
Cassie
1 year ago
I agree with Lasandra, because the fair value adjustment of $40 million should be added to AB's property, plant and equipment.
LA
Lasandra
1 year ago
I think the answer is A) $174 million.
MA
Matthew
1 year ago
Let's see, AB's property, plant and equipment is $100 million, and CD's is $50 million. Then we have the $40 million fair value adjustment. Yep, gotta be B) $190 million. Easy peasy!
EF
Effie
1 year ago
Haha, I bet the person who wrote this question was trying to trick us. But I'm not falling for it! B) is the way to go.
MA
Marisha
1 year ago
Yeah, I think so too. It's always good to double check though.
SH
Shelia
1 year ago
I agree, B) $190 million seems like the correct answer.
HI
Hillary
1 year ago
The answer is clearly B) $190 million. The fair value of CD's property, plant and equipment was $40 million higher than its carrying value, and this difference should be amortized over the remaining 10-year useful life. Simple math, really.
DO
Domitila
1 year ago
So, the consolidated value would be $190 million.
DE
Deangelo
1 year ago
You're right, the fair value difference should be amortized over the remaining useful life.
WI
Willard
1 year ago
So, the total value of property, plant and equipment in AB's consolidated statement of financial position at 31 December 20X4 would be $190 million. Got it.
AN
Annabelle
1 year ago
Yes, that makes sense. The $40 million difference should be spread out over the 10 years, increasing the value of CD's property, plant and equipment in the consolidated statement.
TY
Ty
1 year ago
No, I believe it's B) $190 million.
JU
Julene
1 year ago
I think the answer is A) $174 million.
CH
Charlesetta
1 year ago
I think the answer is B) $190 million because the $40 million difference in fair value should be amortized over the remaining useful life of 10 years.