Assume that on January 31,2014, Microsoft Corporation acquired 90 percent of the outstanding common stock of Power-line Technologies for $3,000,000 cash plus 200,000 shares of Microsoft's $10 par value common stock having a market value of $80 per share. Immediately prior to the acquisition, the trial balances of the two companies were as follows:

A review of the fair values of Powerline's assets indicates that current assets are undervalued by $500,000, plant and equipment is undervalued by $6,000,000, and previously unrecorded brand names have a fair value of $2,000,000. The fair value of the non-controlling interest is $1,800,000.
Required
a. Calculate total goodwill and its allocation to the controlling and non-controlling interests, following U.S. GAAP.
b. Prepare a working paper to consolidate the balance sheets of Microsoft and Powerline at January 31, 2014, following U.S. GAAP.
c. Assume Microsoft uses IFRS and the alternative valuation method for non-controlling interests. Calculate total goodwill and repeat part b following IFRS.

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Dr (Cr) Microsoft Powerline Current assets.$ 10,000,000 Plant and equipment, net....35,000,000 $ 2,000,000 7,000,000 (1.500,000) 3,000,000) (100,000) (1.400,000) 3,000,000) Common stock....v.^ Additional paid-in capital....(6,000,000) Retained earnings.* ar.*..(3,000,000) . (11,000,000)