1 19% 15:38 (50 points) For a $10.5 million cash and stock payment, Preston Company acquired a 55% controlling equity interest in the common voting stock of Scalibrini, Inc. The acquisition was completed on 1/1/20x0. At the time of the acquisition, the book value of Scalibrini's net assets was $16,970,000 Preston acquired Scalibrini with a cash payment of $3 million and by issuing 500,000 shares of their own $1 par value common stock, which at the acquisition date had a market value of $14.90/share. There was no control premium in this transaction. Any amount of the acquisition price paid in excess of the net book value of the acquired assets is assigned to goodwill. At 1/1/20x0, Scalibrini, Inc. prepared the following analysis of the book value vs. the fair value of their non-current assets: Remaining Value Useful Life Book Value S1.700,000$2.550,000 Buildings 2.700,000 3,400,000 Equipmend 3,700,000 3,300,000 Fair Land 7 years S years Preston Company uses the equity method to account for the acquisition of Scalibrini, Inc. Required: A. Prepare a schedule showing the allocation of the purchase price to the net asset acquired. In your schedule include the estimated useful lives and annual amortizations for fair value adjustments to specific net assets acquired. B. Prepare the journal entry to record Preston Company's investment in Scalibrini, Inc. @1/1/20x0. C. Prepare a schedule reconciling Preston Company's Investment in Scalibrini, Inc. account from the acquisition date, i.e, 1/1/20x0, to 12/31/20x0. D. On the next page, I've posted Preston Company and Scalibrini, Inc.'s account balances as of December 31, 20x0. Using those account balances, 1. Prepare the worksheet adjusting entries as of December 31, 20x0 to consolidate Preston Company and Scalibrini, Inc. 2. Using the given information and an excel worksheet, prepare the worksheet to consolidate Preston Company and Scalibrini, Inc. E. For information purposes, the Controller of Preston Company asks that you briefly summarize the implications for the consolidation accounting and the consolidating adjusting entries of an intra-entity, i.e. between Preston and Scalibrini, transfer of a depreciable asset. Following are the separate financial statements of Preston and Scalibrini, Inc. for the year ending 12/31/20x0: Scalibrini Company Incorporated 298,000,000 103,750,000| |271,000,000| 95,800,000 4.361,500 31,361,500 7,950,000 Preston Revenues Expenses Equity in income of Scalibrini, Inc. Net income 0 Retained earnings, January 1, 20x0 Net income (above) Dividends paid Retained earnings, December 31, 20x0 2,500,000 31,361,500 7,950,000 5,000,000 3.000,000 28,861,500 5,050,000 100,000 Current Assets Investment in Scalibrini, Inc Land Buildings Equipment (net) Total assets 30,500,000 20,800,000 13,161,500 1,500,000 1,700,000| 5,600,000 2,360,000 3.100,000 2,960,000 53,861,500 27,820,000 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, Dec. 31, 20x0 (above) 28,861,5005,050,000 Total liabilities and stockholders' equity 53,861,500 27,820,000 3,100,000 4,900,000| 1,000,000 2,900,000 6,000,000| 19,000,000 10,870,000