5-1 and 5-2

CISE 5-1 interest in Shaw Company for $540,000 Allocation of Cost LO 1 LO3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company On this date, Shaw Company had common stock of $400,000 and retained carnings of An examination of Shaw Company's assets and liabilities revealed that the equal to their fair value except for marketable securities and equipment: assets and liabilities revealed that their book value was Book Value Fair Value Marketable securities $ 20,000 $ 45,000 Equipment (net) 120,000 140,000 Required: A. Prepare a Computation and Allocation Schedule for the difference between book value of equity acquired and the value implied by the purchase price. B. Determine the amounts at which the above assets (plus goodwill, if any) will appear on the consolidated balance sheet on January 1, 2018 ISE 5-2 End of the Year of Acquisition Workpaper Entries LO 1 109 On January 1, 2020, Payne Corporation purchased a 75% interest in Salmon Company for $585,000. A summary of Salmon Company's balance sheet on that date revealed the following: Book Value Fair Value Equipment $525.000 $705,000 Other assets 150,000 150,000 $675.000 $855,000 Liabilities $ 75,000 $ 75,000 Common stock 225.000 Retained earnings 375,000 $675,000 The equipment had an original life of 15 years and has a remaining useful life of 10 years, Required: For the December 31, 2020, consolidated financial statements workpaper, prepare the workpaper entry to allocate and depreciate the difference between book value and the value implied by the purchase price assuming: A. Equipment is presented net of accumulated depreciation. B. Accumulated depreciation is presented on a separate row in the workpaper and in the consolidated statement of financial position