A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The capital stock balance of Saxton was $3,000,000 on this date, and the balance in retained earnings was $1,000,000. The cost of the investment was $3,750,000.

The balance sheet information for Saxton on the acquisition date revealed these values:

	Book Value	Fair Value
Inventory	700,000	750,000
Equipment, net	2,000,000	2,100,000
Land	1,600,000	1,600,000

The equipment was determined to have a 15 year life when purchased at the beginning of 2009. Saxton reported net income in 2014 of $250,000 and declared dividends of $50,000. All inventory on January 2, 2014 was sold in 2014.

Saxon reported net income in 2015 of $300,000 and declared dividends of $60,000.

Required: (assume the COMPLETE EQUITY METHOD is used to account for the investment).

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.) Prepare the worksheet entries to eliminate the investment account, and to allocate and depreciate the difference between the book value and the implied value for the December 31, 2014 consolidated statement workpapers.

C.) Prepare the worksheet entries to eliminate the investment account, and to allocate and depreciate the difference between the book value and the implied value for the December 31, 2015 consolidated statement workpapers.