On January 1, 20X1, 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’s assets and liabilities:

Required:

1. Prepare the entry Delta would make to record the acquisition of Sigma under the acquisition method. Use the amount paid by Delta for its 80% interest to impute the total fair value of Sigma at acquisition.

2. Calculate the amount of goodwill resulting from the acquisition of 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.

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