Question

On April 1, 2015, Paxton Corporation acquired all of the outstanding voting common stock of Stanley Company and Stanley will remain a separate corporation. Stanley's year-end is December 31. How should the assets and liabilities of Stanley be reported on the consolidated financial statements when Stanley is combined with Paxton on April 1, 2015

Answer 1

Answer: At fair values at the April 1, 2015 date of the acquisition.

Step-by-step explanation:

From the question, we are informed that Paxton Corporation acquired all of the outstanding voting common stock of Stanley Company and Stanley will remain a separate corporation. Stanley's year-end is December 31.

Based on the above scenario, the assets and the liabilities of Stanley should be reported on the consolidated financial statements when Stanley is combined with Paxton on April 1, 2015 at fair values at the April 1, 2015 date of the acquisition.

The fair value is the value of a good or asset gotten when an unbiased estimate of the good or asset's potential market price is taken.