Step Acquisition; No Significant Influence Penco acquired two blocks of Senco, a family-owned company. Related information is as follows:

Information Relating to Investee Percentage Date Block Borneo's Common Retained Undervaluation Acquired Was Required Cost Stock Earnings of Net Assets 10% 1/1/06 . $ 100,000 $400,000 $300,000 $ 80,000 90% 12/31/08 . 1,260,000 400,000 640,000 110,000 100%

Required Additional information:

1. Senco’s only under- or (over)valued asset or liability at 1/1/06 and 12/31/08 was land.

2. Senco declared cash dividends on its common stock of $90,000 in 2006, 2007, and 2008.

3. Penco was not able to exert siginficant influence after acquiring the first block of stock.

4. No impairment of value adjustment was made to Penco’s Investment account in 2006, 2007, or 2008.

5. Penco has decided to use the parent company concept.

1. Prepare an analysis of the Investment account through the date control was achieved.

2. Prepare all consolidation entries at 12/31/08.