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1. On January 1, 2020. Pilsner Company acquired a 70% interest in Smalley Company for $3,500,000. On that date, Smalley Company had common stock of

1. On January 1, 2020. Pilsner Company acquired a 70% interest in Smalley Company for $3,500,000. On that date, Smalley Company had common stock of $900,000 and retained earnings of $1,700,000. The book values of assets and liabilities were equal to fair values except for the following:

Book Value Fair Value
Inventory $55,000 $68,000
Supplies $8,000 $5,500
Salaries payable $7,500 $9,700
Equipment $130,000 $290,000
Land $600,000 $760,000

The inventory was sold in 2020. The equipment had an estimated remaining useful life of 8 years. Pilsner Company uses the cost method to record its investment in Smalley Company

Required:

Prepare all the workpaper entry to allocate, amortize, and depreciate the difference between implied and book value on:

A) 1/1 2020,

B) 12/31/2020

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