Allen Company acquired 100 percent of Bradford Company?s voting stock on January 1, 2014, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $21.5 per share). As of that date, Bradford had stockholders? equity totaling $168,850. Land shown on Bradford?s accounting records was undervalued by $15,500. Equipment (with a five-year remaining life) was undervalued by $8,650. A secret formula developed by Bradford was appraised at $22,000 with an estimated life of 20 years.

Following are the separate financial statements for the two companies for the year ending December 31, 2018. There were no intra-entity payables on that date. Credit balances are indicated by parentheses.

	Allen Company		Bradford Company
Revenues	$	(518,000	)		$	(192,500	)
Cost of goods sold		171,000				71,000
Depreciation expense		144,000				60,000
Subsidiary earnings		(58,670	)			0
Net income	$	(261,670	)		$	(61,500	)
Retained earnings, 1/1/18	$	(836,000	)		$	(99,600	)
Net income (above)		(261,670	)			(61,500	)
Dividends declared		175,500				40,000
Retained earnings ,12/31/18	$	(922,170	)		$	(121,100	)
Current assets	$	418,000			$	123,500
Investment in Bradford		218,100				0
Company
Land		524,000				60,000
Buildings and equipment (net)		742,000				231,000
Total assets	$	1,902,100			$	414,500
Current liabilities	$	(289,930	)		$	(228,400	)
Common stock		(600,000	)			(60,000	)
Additional paid-in capital		(90,000	)			(5,000	)
Retained earnings, 12/31/18		(922,170	)			(121,100	)
Total liabilities and equity	$	(1,902,100	)		$	(414,500	)

1. a-1.Complete the table to show the allocation of the fair value in excess of book value.
2. a-2.What balance will Allen show in its Subsidiary Earnings account?
3. b.Complete the worksheet by consolidating the financial information for these two companies.

a. Complete the table to show the allocation of the fair value in excess of book value. Accounts Amount Annual Excess Amortizations Life years years years years years Total $0 $0 a.-b. What balance will Allen show in its Subsidiary Earnings account? Equity earnings $0 B. Complete the worksheet by consolidating the financial information for these two companies. (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. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.) ALLEN AND SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Allen Co. Bradford Co. Debit Credit Consolidated Totals Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Equity in subsidiary earnings Net income $(518,000) 171,000 144,000 0 (58,670) $(261,670) $(192,500) 71,000 60,000 0 0 $(61,500) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 (836,000) (261,670) 175,500 $(922,170) (99,600) (61,500) 40,000 $(121,100) $0 Balance Sheet Current assets Investment in Bradford Co. Land Buildings and equipment (net) Formula Total assets $418,000 218,100 524,000 742,000 0 $1,902,100 $123,500 0 60,000 231,000 0 $414,500 $0 (289,930) (600,000) (90,000) (922,170) $(1,902,100) (228,400) (60,000) (5,000) (121,100) $(414,500) 0 $0 Current liabilities Common stock Additional paid-in capital Retained earnings 12/31 Total liabilities and equity $0 0 $0 $0