McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Book Value Fair ValueBuildings (10-year life)$10,000 $8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 ??Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.?In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Equipment account?
A. $3,000 increase.
B. $2,700 increase.
C. $2,700 decrease.
D. $3,000 decrease.
E. No adjustment is necessary.
Answer: A
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