On January 1 2009 Pope Company purchased 90 of Sun
On January 1, 2009, Pope Company purchased 90% of Sun Company’s common stock for $5,800,000 cash. Immediately after the acquisition, the two companies’ balance sheets were as follows:

Sun Company’s note payable includes a $90,000 note payable to Pope Company, plus $20,000 payable to a bank. Any difference between book value and the value implied by the purchase price relates to subsidiary property and equipment.

A. Prepare a Computation and Allocation Schedule for the difference between book value of equity and the value implied by the purchase price.
B. Prepare a consolidated balance sheet workpaper on January 1,2009.
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