Bargain purchase, allocation schedule, and balance sheet

The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized

as follows (in thousands):

Pablo Corporation Diego Corporation

Book Value Fair Value Book Value Fair Value

Assets

Cash $100 $100 $40 $40

Receivables-net 50 50 30 30

Inventories 130 150 80 100

Land 50 100 30 50

Buildings-net 150 200 70 100

Equipment-net 100 150 50 75

Total assets $580 $750 $300 $395

Equities

Accounts payable $ 80 $ 80 $ 50 $ 50

Other liabilities 100 90 75 45

Common stock, $10 par 200 100

Other paid-in capital 100 25

Retained earnings 100 50

Total equities $580 $300

On January 1, 2017, Pablo Corporation acquired all of Diego Corporation's outstanding common stock

for $250,000. Pablo paid $50,000 in cash and issued a five-year, 10 percent note for the balance. Diego

was dissolved.

REQUIRED

1. Prepare a schedule to show how the investment cost is allocated to identifiable assets and liabilities.

2. Prepare a balance sheet for Pablo Corporation on January 1, 2017, immediately after the acquisition