PROBLEM 31

The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2019, just after the parent had purchased 90% of the subsidiary's stock:

	Case I			Case II
	P Company	S Company	P Company	S Company
Current assets	$ 880,000	$260,000	$ 780,000	$280,000
Investment in S Company	190,000		190,000
Longterm assets	1,400,000	400,000	1,200,000	400,000
Other assets	90,000	40,000	70,000	70,000
Total	$2,560,000	$700,000	$2,240,000	$750,000
Current liabilities	$ 640,000	$270,000	$ 700,000	$260,000
Longterm liabilities	850,000	290,000	920,000	270,000
Common stock	600,000	180,000	600,000	180,000
Retained earnings	470,000	(40,000)	20,000	40,000
Total	$2,560,000	$700,000	$2,240,000	$750,000

Required:

1. Assume that Company S's balance sheet is the same as the balance sheet used in Case I (from part A). Suppose that there were 50,000 shares of S Company common stock outstanding and that Company P acquired 90% of the shares for $4.50 a share. Shortly after acquisition, the noncontrolling shares were selling for $4.25 a share. Prepare a computation and allocation of difference schedule considering this information.