Case:

Link Inc. acquires all of the outstanding stock of Ganondorf Corporation on January 1,
2017. At that date, Ganondorf only owns three assets and no liabilities:
 

Book Value Fair Value

Inventory P40,000 P50,000

Equipment (10 year life) 80,000 75,000

Building (20 year life) 200,000 300,000

 
If Link pays P450,000 in cash for Ganondorf, what amount would be represented as the
subsidiary’s building in a consolidation at December 31, 2019, assuming the book value
at that date is still P200,000?
 
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$285,000

Fair Value at Acquisition ($300,000) - Amortization [($100,000/20) × 3] = $285,000