Padro Company purchases a controlling interest in Salto Company. Salto had identifiable net assets with a cost of $400,000 and a fair value of $600,000. It was agreed that the total fair value of Salto’s common stock was $900,000. What adjustments will be made to Salto’s accounts, and what new accounts and amounts will be recorded if:

a. Padro purchases 100% of Salto’s common stock for $900,000.

b. Padro purchases 80% of Salto’s common stock for $720,000.

AppendixLO1