Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $525,000. On January 3, 2011, the acquisition date, Saddler Corporation’s capital stock and retained earnings account balances were $500,000 and $100,000, respectively.

The following values were determined for Saddler Corporation on the date of purchase:

Required:
A. Prepare the entry on the books of Pace Company to record its investment in Saddler Corporation.
B. Prepare a Computation and Allocation Schedule for the difference between book value and the value implied by the purchase price in the consolidated statementsworkpaper.

Transcribed Image Text:

Book Value Fair Value Inventory Other current assets Marketable securities Plant and equipment S 50,000 200,000 100,000 00,000 70,000 200,000 125,000 S30,000