Problem: Palor Corp acquired 70% of the outstanding common stock of Setting Corp on Janunary 1, 2006 for $178,000 cash. Immediately after this acuquisition the balance sheet information for the two companies was as follows
|
|
|
|
Palor Bv |
Book Value |
Fair Value |
| Cash |
|
|
|
32,000 |
20,000 |
20,000 |
| Receivables-net |
|
|
80,000 |
30,000 |
30,000 |
| Inventories |
|
|
70,000 |
30,000 |
50,000 |
| Land |
|
|
|
100,000 |
50,000 |
60,000 |
| Buildings-net |
|
|
110,000 |
70,000 |
90,000 |
| Equipment-net |
|
|
80,000 |
40,000 |
30,000 |
| Investment in setting |
|
178,000 |
______ |
______ |
| Total assets |
|
|
650,000 |
240,000 |
280,000 |
|
|
|
|
|
|
|
| Accounts payable |
|
|
90,000 |
80,000 |
80,000 |
| other liabilities |
|
|
10,000 |
50,000 |
40,000 |
| Capital stock $10 par |
|
500,000 |
100,000 |
|
| Retained earnings |
|
|
50,000 |
10,000 |
|
| Total equities |
|
|
650,000 |
240,000 |
|
Prepare a schedule to allocate the difference between the cost of the investment in setting and the book value of the interest to identifiable and unidentifiable net assets.
Prepare a consolidated balance sheet for Palor Corp and Subsidiary at January 1, 2006.