Allen Company acquired 100 percent of Bradford Companys voting stock on January 1, 2014, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $19.5 per share). As of that date, Bradford had stockholders equity totaling $145,450. Land shown on Bradfords accounting records was undervalued by $10,700. Equipment (with a five-year remaining life) was undervalued by $6,850. A secret formula developed by Bradford was appraised at $32,000 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	$	(653,000	)		$	(212,500	)
Cost of goods sold		216,000				79,000
Depreciation expense		135,000				60,900
Subsidiary earnings		(69,630	)			0
Net income	$	(371,630	)		$	(72,600	)
Retained earnings, 1/1/18	$	(792,000	)		$	(105,000	)
Net income (above)		(371,630	)			(72,600	)
Dividends declared		175,500				40,000
Retained earnings ,12/31/18	$	(988,130	)		$	(137,600	)
Current assets	$	454,000			$	99,000
Investment in Bradford		237,300				0
Company
Land		430,000				66,600
Buildings and equipment (net)		814,000				182,000
Total assets	$	1,935,300			$	347,600
Current liabilities	$	(257,170	)		$	(145,000	)
Common stock		(600,000	)			(60,000	)
Additional paid-in capital		(90,000	)			(5,000	)
Retained earnings, 12/31/18		(988,130	)			(137,600	)
Total liabilities and equity	$	(1,935,300	)		$	(347,600	)

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.

   Allen Company acquired 100 percent of Bradford Companys voting stock on January 1, 2014, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $19.5 per share). As of that date, Bradford had stockholders equity totaling $145,450. Land shown on Bradfords accounting records was undervalued by $10,700. Equipment (with a five-year remaining life) was undervalued by $6,850. A secret formula developed by Bradford was appraised at $32,000 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	$	(653,000	)		$	(212,500	)
   Cost of goods sold		216,000				79,000
   Depreciation expense		135,000				60,900
   Subsidiary earnings		(69,630	)			0
   Net income	$	(371,630	)		$	(72,600	)
   Retained earnings, 1/1/18	$	(792,000	)		$	(105,000	)
   Net income (above)		(371,630	)			(72,600	)
   Dividends declared		175,500				40,000
   Retained earnings ,12/31/18	$	(988,130	)		$	(137,600	)
   Current assets	$	454,000			$	99,000
   Investment in Bradford		237,300				0
   Company
   Land		430,000				66,600
   Buildings and equipment (net)		814,000				182,000
   Total assets	$	1,935,300			$	347,600
   Current liabilities	$	(257,170	)		$	(145,000	)
   Common stock		(600,000	)			(60,000	)
   Additional paid-in capital		(90,000	)			(5,000	)
   Retained earnings, 12/31/18		(988,130	)			(137,600	)
   Total liabilities and equity	$	(1,935,300	)		$	(347,600	)

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

5. a-2. What balance will Allen show in its Subsidiary Earnings account?

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