Chapter 5 Allocation and Depreciation of Differences Between Implied and Bre and Book Values EXERCISE 5-3 for $525.000.01 Allocation of Cost LO 2 Pace Company purchased 20,000 of the 25,000 shares of Saddler Corporation for $525 January 3, 2019, the acquisition date, Saddler Corporation's capital stock and retained account balances were $500,000 and $100,000, respectively The following values were determined for Saddler Corporation on the date of purchase ained earning Fair Value $ 70,000 Inventory Other current assets Marketable securities Plant and equipment Book Value $ 50,000 200,000 100,000 300,000 200,000 125,000 330,000 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 statements workpaper. EXERCISE 5-4 Allocation of Cost and Workpaper Entries at Date of Acquisition LO 2 On January 1, 2020, Porter Company purchased an 80% interest in Salem Company for $260,000 On this date, Salem Company had common stock of $207,000 and retained earnings of $130.500. An examination of Salem Company's balance sheet revealed the following comparisons bet- ween book and fair values: Book Value Fair Value Inventory $ 30,000 $ 35,000 Other current assets 50,000 55,000 Equipment 300,000 350.000 Land 200,000 200,000 Required: A. Determine the amounts that should be allocated to Salem Company's 1 Company's assets on the consolidated financial statements workpaper on January 1, 2020. B. Prepare the January 1, 2020, consolidated financial statements workpape nate the investment account and to allocate the difference between book value and the value implied by the purchase price