On July 1,2015, Walter Allen Inc. purchased 6,000 shares of the outstanding common stock of Piaffe Corporation at a cost of $140,000. Piafee had 30,000 shares of outstanding common stock. Assume the total book value and fair value of net assets is $650,000. Both companies have a January through December fiscal year. The following data pertains to Piaffe Corporation during 2015:
Dividends declared and paid, Jan. 1-June 30......................$12,000
Dividends declared and paid, July 1-Dec. 31.....................$12,000
Net income, Jan.1-June 30............................................$14,000
Net income, July 1- Dec. 31.........................................$18,000
Required:
1. Prepare the entry to record the original investment in Piaffe.
2. Compute any goodwill on the acquisition.
3. Prepare all other entries for 2015.