Allen Company acquired 100 percent of Bradford Companys voting stock on January 1, 2020, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $17.00 per share). As of that date, Bradford had stockholders equity totaling $126,350. The land shown on Bradfords accounting records was undervalued by $13,400. Equipment (with a five-year remaining life) was undervalued by $7,650. A secret formula developed by Bradford was appraised at $22,600 with an estimated life of 20 years.

The following are the separate financial statements for the two companies for the year ending December 31, 2024. There were no intra-entity payables on that date. Credit balances are indicated in parentheses.

Accounts	Allen Company	Bradford Company
Revenues	$ (689,000)	$ (271,250)
Cost of goods sold	228,000	102,500
Depreciation expense	181,500	79,800
Equity in subsidiary earnings	(86,290)	0
Net income	$ (365,790)	$ (88,950)
Retained earnings, 1/1/24	$ (800,000)	$ (102,600)
Net income (above)	(365,790)	(88,950)
Dividends declared	175,500	40,000
Retained earnings, 12/31/24	$ (990,290)	$ (151,550)
Current assets	$ 320,000	$ 75,500
Investment in Bradford Company	246,900	0
Land	438,000	73,800
Buildings and equipment (net)	764,000	199,000
Total assets	$ 1,768,900	$ 348,300
Current liabilities	$ (88,610)	$ (131,750)
Common stock	(600,000)	(60,000)
Additional paid-in capital	(90,000)	(5,000)
Retained earnings, 12/31/24	(990,290)	(151,550)
Total liabilities and equity	$ (1,768,900)	$ (348,300)

Required:

a-1. Complete the table to show the allocation of the fair value in excess of the book value.

Accounts	Amount	Life	Annual Excess Amortizations
Land	$13,400	0	years	0
Equipment	7,650	5	years	$1,530
Formula	22,600	20	years	1,130
			years
			years
Total	$43,650			$2,660

a-2. Complete the table to show the computation for Subsidiary Earnings.

	Amounts
Equity accrual
Amortization expense
Equity earnings	$0

b. Complete the worksheet by consolidating the financial information for these two companies. Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.

ALLEN AND SUBSIDIARY
Consolidation Worksheet
For Year Ending December 31, 2024
Accounts	Allen Company	Bradford Company	Consolidation Entries	Consolidated Totals
Debit	Credit
Income Statement
Revenues	$(689,000)	$(271,250)			$960,250
Cost of goods sold	228,000	102,500			330,500
Depreciation expense	181,500	79,800	1,530		262,830
Amortization expense	0	0	1,130		1,130
Equity in subsidiary earnings	(86,290)	0	86,290		0
Net income	$(365,790)	$(88,950)			$365,790
Statement of Retained Earnings
Retained earnings 1/1	(800,000)	(102,600)	102,600		800,000
Net income (above)	(365,790)	(88,950)			365,790
Dividends declared	175,500	40,000		40,000	175,500
Retained earnings 12/31	$(990,290)	$(151,550)			$990,290
Balance Sheet
Current assets	$320,000	$75,500			$395,500
Investment in Bradford Company	246,900	0	40,000	286,900	0
Land	438,000	73,800	13,400		525,200
Buildings and equipment (net)	764,000	199,000			963,000
Formula	0	0	18,080	1,130	16,950
Total assets	$1,768,900	$348,300			$1,900,650
Current liabilities	(88,610)	(131,750)			220,360
Common stock	(600,000)	(60,000)			600,000
Additional paid-in capital	(90,000)	(5,000)			90,000
Retained earnings 12/31	(990,290)	(151,550)			990,290
Total liabilities and equity	$(1,768,900)	$(348,300)	$263,030	$328,030	$1,900,650