1. On January 1, 2002, Plymouth Corporation purchased an 80% interest in Salem Company for $1,200,000. A summary of Salem's balance sheet on that date revealed the following: Book Value Fair Value Receivables $ 200,000 $ 200,000 Inventory 350,000 370,000 Equipment 500,000 650,000 Land 245.000 330.000 $1,295,000 $ 1,550,000 Liabilities $ 295,000 Common stock 500,000 Retained earnings 500,000 $1,295,000 The equipment had an original life of 20 years and has a remaining useful life of 10 years. A. Calculate the difference between cost and book value B. Determine the allocation of the difference between cost and book value Allocation of Difference Between Cost and Book Value Asset/Liability Fair Value Book Value Difference P's % P's Share Receivables Inventory Plant & Equip