P$2-12$

Allocation schedule and computations $($excess cost over fair value$)$

Pop Corporation acquired a $70$ percent interest in Son Corporation on April $1,2016,$ when it purchased

$14,000$ of Son's $20,000$ outstanding shares in the open market at $$13$ per share. Additional costs of acquir$-$

ing the shares consisted of $$10,000$ legal and consulting fees. Son Corporation's balance sheets on January

$1$ and April $1,2016,$ are summarized as follows $($in thousands$)$:

ADDITIONAL INFORMATION

The overvalued inventory items were sold in September $2016.$

The undervalued items of equipment had a remaining useful life of four years on April $1,2016.$

Son's net income for $2016$ was $$80,000($ $$60,000$ from April to December $31,2016).$

On December $1,2016,$ Son declared dividends of $$2$ per share, payable on January $10,2017.$

Any unidentified assets of Son are not amortized.

REQUIRED

Prepare a schedule showing how the difference between Pop's investment cost and book value acquired

should be allocated to identifiable and$/$or unidentifiable assets.

Calculate Pop's investment income from Son for $2016.$

Determine the correct balance of Pop's Investment in Son account at December $31,2016.$