Bargain purchase, allocation schedule, and balance sheet The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized as follows (in thousands):

Pablo Corporation Diego Corporation Book Value Fair Value Book Value Fair Value Assets Cash $100 $100 $40 $40 Receivables–net 50 50 30 30 Inventories 130 150 80 100 Land 50 100 30 50 Buildings–net 150 200 70 100 Equipment–net 100 150 50 75 Total assets $580 $750 $300 $395 Equities Accounts payable $ 80 $ 80 $ 50 $ 50 Other liabilities 100 90 75 45 Common stock, $10 par 200 100 Other paid-in capital 100 25 Retained earnings 100 50 Total equities $580 $300 On January 1, 2017, Pablo Corporation acquired all of Diego Corporation’s outstanding common stock for $250,000. Pablo paid $50,000 in cash and issued a five-year, 10 percent note for the balance. Diego was dissolved.

REQuIRED 1. Prepare a schedule to show how the investment cost is allocated to identifiable assets and liabilities.

2. Prepare a balance sheet for Pablo Corporation on January 1, 2017, immediately after the acquisition.

P1-5