On January 1, 2010, Company P purchased 100 percent of the outstanding voting shares of Company S in the open market for $80,000 cash. On that date, the separate balance sheets (summarized) of the two companies reported the following book values:

It was determined on the date of acquisition that the market value of the assets and liabilities of Company S were equal to their book values.

Required:
1. Give the journal entry that Company P made at date of acquisition to record the investment. If none is required, explain why.
2. Analyze the acquisition to determine the amount of goodwill purchased.
3. Prepare a consolidated balance sheet immediately afteracquisition.

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IMMEDIATELY AFTER THE ACQUISITION JANUARY 1,2010 Company P $ 11,500 80,000 31,000 $122,500 $ 41.000 Company S $17,500 41,500 $59,000 $10,000 Cash Investment in Co. S (at cost) Property and equipment (net) Total assets Liabilities Common stock: Company P (no-par) Company S (par $10) 77,000 40,500 8,500 $59,000 Retained earnings 4,500 $122,500 Total liabilities and stockholders' equity