Exercise 2 (LO 2) Block purchase, control with first block. Barker Corporation purchased a 60% interest in Hard Knock Company on January 1, 20X1, for $150,000. On that date, Hard Knock Company had the following stockholders’ equity:

Common stock ($10 par) . . . . . . . . . . . . $100,000 Retained earnings . . . . . . . . . . . . . . . . . 20,000

$120,000 At the time of the second purchase, Boon determined that Doyle’s equipment was understated by $50,000 and had a 5-year remaining life. All other book values approximated fair values. Any remaining excess is attributed to goodwill.
1. Prepare a determination and distribution of excess schedule for the second purchase.
2. Record the investment made by Boon on January 1, 20X6.
3. Since control has now been achieved, Boon will use the simple equity method for its investment in Doyle. Assume that the cost method was used to account for the initial 10% interest. Convert the 10% interest to the simple equity method balance on January 1, 20X6.