Analyzing Cost Plugg Inc. acquired 100% of Sparks Inc.’s outstanding common stock for $160,000 cash. Information about Sparks, which leases its manufacturing facilities and which is in poor financial condition as of the acquisition date, is as follows:

Book Value Current Value Accounts Cash .

receivable, net . . . .

Inventory .

Equipment, net .

Total Assets .

Payables and accruals .

Long-term debt .

Total Liabilities .

Common stock .

Additional paid-in capital . . . Accumulated deficit .

Total Stockholders' Equity .

Total Liabilities and Equity

$ 20,000 390,000 $ 390,000 20,000 300,000 270,000 100,000=

60,000

$ 810,000 $740,000

$ 450,000 $450,000 50,000 50,000

$ 500,000 $ 500,000

$ 220,000 340,000

(250,000)

$ 310,000 240,000

$ 810,000 $740,000

* Net of accumulated depreciation of $77,000.

Required 1. Separate the investment cost into the components of the major conceptual elements.

2. Prepare all consolidation entries as of the acquisition date.