On January 1, 2011, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill.
Following are the individual financial records for these two companies for the year ended December 31, 2014.

Required:
Prepare a consolidation worksheet for this business combination.

Transcribed Image Text:

Rand Corp. Spaulding Inc. S 372,000 Revenues S108,000 Expenses (264,000) (72,000) Equity in subsidiary earnings 25,000 $ 133,000 $ 36,000 Net Income S 765,000 Retained earnings, January 1, 2014 $102,000 Net income (above) 133,000 36,000 Dividends paid (84,000) (24,000) $ 814,000 $114,000 Retalned earnings, December 31, 2014 $ 150,000 S 2,000 Current assets Investment in Spaulding Inc. 242,000 Buildings (net) 525,000 85,000 Equipment (net) 389,250 129,000 $1,306,250 $236,000 Total assets S 82,250 S 50,000 Liabilities Common stock 360,000 72,000 Additional paid-in capital 50,000 Retained earnings, December 31, 2014 (above) 114,000 814,000 Total llablitles and stockholders' equlty $1,306,250 $236,000