Allen Company acquired 100 percent of Bradford Companys voting stock on January 1, 2017, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $22.50 per share). As of that date, Bradford had stockholders equity totaling $179,450. Land shown on Bradfords accounting records was undervalued by $12,400. Equipment (with a five-year remaining life) was undervalued by $9,550. A secret formula developed by Bradford was appraised at $23,600 with an estimated life of 20 years.

The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no intra-entity payables on that date. Credit balances are indicated by parentheses.

	Allen Company				Bradford Company
Revenues	$	(650,000	)		$	(247,500	)
Cost of goods sold		215,000				93,000
Depreciation expense		160,500				73,500
Subsidiary earnings		(77,910	)			0
Net income	$	(352,410	)		$	(81,000	)
Retained earnings, 1/1/21	$	(822,000	)		$	(117,000	)
Net income (above)		(352,410	)			(81,000	)
Dividends declared		175,500				40,000
Retained earnings ,12/31/21	$	(998,910	)		$	(158,000	)
Current assets	$	400,000			$	88,000
Investment in Bradford		253,100				0
Company
Land		480,000				74,700
Buildings and equipment (net)		758,000				244,000
Total assets	$	1,891,100			$	406,700
Current liabilities	$	(202,190	)		$	(183,700	)
Common stock		(600,000	)			(60,000	)
Additional paid-in capital		(90,000	)			(5,000	)
Retained earnings, 12/31/21		(998,910	)			(158,000	)
Total liabilities and equity	$	(1,891,100	)		$	(406,700	)

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

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

3. b. Complete the worksheet by consolidating the financial information for these two companies.

Req A1 Req A2 Req B Complete the table to show the allocation of the fair value in excess of book valu Amount Life Annual Excess Amortizations $ Accounts Land Equipment Formula 12,400 9,550 23,600 0 years 5 years 20 years years years Total $ 45,550 0 Req A1 Req A2 ReqB Complete the table to show the computation for Subsidiary Earnings. (Negative amo sign.) Amounts $ 81,000 Equity accrual Amortization expense Equity earnings $ 81,000 Tanau II LILICO 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 $ (650,000) $ (247,500) 215,000 93,000 160,500 73,500 0 0 (77,910) 0 $ (352,410) $ (81,000) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 (822,000) (117,000) (352,410) (81,000) 175,500 40,000 (998,910) $ (158,000) $ 88,000 0 Balance Sheet Current assets Investment in Bradford Co. Land Buildings and equipment (net) Formula Total assets $ 400,000 $ 253,100 480,000 758,000 0 $ 1,891,100 $ 74,700 244,000 0 406,700 Current liabilities Common stock Additional paid-in capital Retained earnings 12/31 Total liabilities and equity (202,190) (600,000) (90,000) (998,910) $ (1,891,100) $ (183,700) (60,000) (5,000) (158,000) (406,700) $ 0 $ 0