[FAR too much information]

12/31/1 BS:

Parent total current assets = 310

Subsidiary total current assets = 135

1/1/1: Parent purchased subsidiary. FV of subsidiary’s assets and liabilities = CV, except that the fair value of certain items in subsidiary’s inventory were 10,000 more than their CV. These items were on hand 12/31/1.

What is the correctly recognized amount of current assets?

Correct answer: Parent (310) + Subsidiary (135) + Adjustment of inventory to fair value (10)

My answer: Parent (310) + Subsidiary (135)

My logic: Parent acquired subsidiary 1/1/1. In the computation of goodwill or gain, and the revaluation of assets and liabilities to fair value, wouldn’t the parent during 1/1/1 recognize the increased value of the inventory and report it as part of the 12/31/1 total current assets? Why wait until the B/S date?