Packo Company acquired all the voting stock of Sennett Corporation on January 1, 2010 for $90,000 when Sennett had Capital Stock of $50,000 and Retained Earnings of $8,000. The excess of fair value over book value was allocated as follows:(1) $5,000 to inventories(sold in 2010), (2) $16,000 to equipment with a 4-year remaining useful life and (3) the remainder to goodwill.
Financial statements for Packo and Sennett at the end of the fiscal year ended December 31, 2011 , appear in the first two columns of the partially completed consolidation working papers. Packo has accounted for its investment in Sennett using the equity method of accounting.