On January 1, 2017, Knight Corporation purchases all the outstanding shares of Craig Company for $950,000. It has been decided that Craig Company will use push-down accounting principles to account for this transaction. The current balance sheet is stated at historical cost.
The following balance sheet is prepared for Craig Company on January 1, 2017:

Knight Corporation receives the following appraisals for Craig Company€™s assets and liabilities:
Cash . . . . . . . . . . . . . . . . . . . . . . $ 80,000
Accounts receivable . . . . . . . . . . 260,000
Prepaid expenses . . . . . . . . . . . . 20,000
Land. . . . . . . . . . . . . . . . . . . . . . . 250,000
Building (net) . . . . . . . . . . . . . . . . 700,000
Current liabilities . . . . . . . . . . . . . 90,000
Bonds payable . . . . . . . . . . . . . . 280,000
Deferred tax liability . . . . . . . . . . 40,000
1. Record the investment.
2. Prepare the value analysis schedule and the determination and distribution of excess schedule.
3. Record the adjustments on the books of Craig Company.
4. Prepare the entries that would be made on the consolidated worksheet to eliminate the investment.

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Assets Liabilities and E Current assets: $ 90,000 Current liabilities Longterm liabilities: Cash Accounts receivable. .. 260,000 20,000 $200,000 Deferred taxes 50,000 350,000 Prepaid expenses.... 360,000 Stockholders' equity Common stock ($10 par). Retained earnings . .. Property, plant, and equipment: $300,000 420,000 720,000 Land Building (net)600,000 800,000 Total assets $1,160,000 Total liabilities and equity 1,60,000