On January 1, 2008, Delta Inc. acquired 80% of Sigma Company’s outstanding stock for $80,000 cash. Following are the balance sheets for Delta and Sigma immediately before the acquisition, as well as fair value information regarding Sigma:

Required:
1. Give the journal entry Delta would make to record the acquisition of Sigma under the purchase method.
2. Calculate the amount of goodwill that Delta will record as a result of acquiring Sigma.
3. Provide the adjustment and elimination entries Delta would make to prepare the consolidated balance sheet immediately after the acquisition.
4. Prepare the consolidated balance sheet for Delta immediately after its acquisition of Sigma Company.
5. Repeat requirements 1-4 under the acquisition method. Use the amount paid by Delta for its 80% interest to impute the total fair value of Sigma at acquisition.

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Assets Cash Accounts receivable Inventory Land Plant and equipment, net Total Sigma Company Delta Inc. Book Value Fair Value $ 91,000 $ 8,000 $ 8,000 19,000 15,000 9,000 47,000 31,000 43,000 12,000 5,000 12,000 66,000 35,000 51,000 $235,000 $94,000 $123,000 Liabilities and shareholders' equity Accounts payable $ 52,000 $35,000 $ 35,000 Long-term debt 66,000 15,000 15,000 Common stock Delta-5,000 shares, $1.00 par 5,000 Sigma-4,000 shares, $0.50 par 2,000 Additional paid-in capital 30,000 12,000 Retained earnings 82,000 30,000 Total $235,000 $94,000