1. On January 1, 2010, P Company purchased an 80% interest in S Company for $900,000. At that time, S Company had capital stock of $600,000 and retained earnings of $100,000. Differences between the fair value and the book value of the identifiable assets of Salem Company were as follows:

   		Fair Value in Excess of Book Value
   	Equipment	$       180,000
   	Land	20,000
   	Inventory	20,000

   The book values of all other assets and liabilities of S Company were equal to their fair values on January 1, 2010. The equipment had a remaining life of five years. The inventory was sold in 2010.

   S Company’s net income and dividends declared in 2010 Net Income of $120,000; Dividends Declared of $30,000

2. Requirement

3. Prepare W/P at the date of purchase to eliminate the equity of S and investment of P (see above question)
   
   

Answer rating: 100% (QA)

ANSWER Particulars Debit Credit Common Stock 60000000 Retained Earnings 100... View the full answer