On January 2, 2016, Perkins Company acquired all of Sanders Corporation's stock for \($4,000,000\) cash, when the book value of Sanders' stockholders' equity was \($2,200,000\). Sanders reported \($500,000\) of net income and declared and paid appear below: dividends of \($150,000\) in 2016. Data related to the acquisition at January 2, 2016,

Sanders uses FIFO, and all of its beginning inventory was sold in 2016. The fair value of the previously unrecorded lawsuit liability increased to \($85,000\) by December 31, 2016, within the measurement period.
Impairment tests show \($100,000\) in impairment for the in-process R&D and no impairment for the goodwill during 2016.

Required

a. Prepare a schedule to compute Perkins’ equity in net income of Sanders Corporation for 2016 using the complete equity method, and prepare all entries related to the investment made by Perkins during 2016.

b. Compute the goodwill for this acquisition, after the measurement period adjustment.

c. Prepare the eliminating entries made in consolidation at December 31, 2016.

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Out-of-pocket merger costs paid in cash by Perkins $ 50,000 Excess of fair value of Sanders' inventory over book value..... 80,000 Excess of fair value of Sanders' equipment over book value (10-year life, straight-line).... Fair value of Sanders' previously unrecorded lawsuit liability...... 200,000 70,000 Fair value of Sanders' previously unrecorded in-process research and development ..... Acquisition-related restructuring costs paid in cash by Perkins.... 300,000 100,000