Pascal Corporation purchased 90% of the stock of Salzer Company for $2,070,000 on January 1, 2012. On this date, the fair value of the assets and liabilities of Salzer Company was equal to their book value except for the inventory and equipment accounts. The inventory had a fair value of $725,000 and a book value of $600,000. The equipment had a book value of $900,000 and a fair value of $1,075,000.
The balances in Salzer Company’s capital stock and retained earnings accounts on the date of acquisition were $1,200,000 and $600,000, respectively.
In general journal form, prepare the entries on Salzer Company’s books to record the effect of the pushed down values implied by the purchase of its stock by Pascal Company assuming that values are allocated on the basis of the fair value of Salzer Company as a whole imputed from the transaction.