Use the preceding information for Palto€™s purchase of Saleen common stock. Assume Palto purchases 100% of the Saleen common stock for $400,000 cash. Palto has the following balance sheet immediately after the purchase:

Required
1. Prepare the value analysis schedule and the determination and distribution of excess schedule for the investment in Saleen.
2. Complete a consolidated worksheet for Palto Company and its subsidiary Saleen Company as of January 1, 2011.
In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2011. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet:

An appraisal provides the following fair values for assets:
Accounts receivable . . . . . . . . . . $ 20,000
Inventory . . . . . . . . . . . . . . . . . . . 60,000
Land. . . . . . . . . . . . . . . . . . . . . . . 80,000
Buildings . . . . . . . . . . . . . . . . . . . 320,000
Equipment . . . . . . . . . . . . . . . . . . 60,000
Copyright . . . . . . . . . . . . . . . . . . 50,000

Transcribed Image Text:

Palto Company Balance Sheet January 1, 2011 Assets Liabilities and E $ 80,000 200,000 20,000 180,000 546,000 $ 161,000 Currnt liabilities Accounts receivable 65,000 Bonds payable ($1 par 80,000 Common słock.. 400,000 Paid-in capital in excess of par 100,000 Retained earnings. 250,000 (80,000) 90,000 Inveslment in Saleen . . Buildings - Accumulated depreciation . Equipment.. Accumulated depreciation Total assets.... Total liabiliies and equity $1,026,000 Saleen Company Balance Sheet January 1, 2011 Assets Liabilities and Equity 20,000 Current liabilities . Accounts receivable Inventory Land Buildings Accumulated depreciation Equipment $ 40,000 100,000 10,000 90,000 60,000 50,000 Bonds payable 40,000 Common stock ($1 par) 200,000 Paid-in capital in excess of par (50,000 Retained earnings 60,000 Total assels. $300,000 ties and equity$300,000