Alpha Corporation purchased 70% of Beta Company on January 1, 2015, for $98,000. On that date, the non controlling interest had a fair value of $42,000 and Beta reported common stock outstanding of $100,000 and retained earnings of $20,000. The differential is partially comprised of $5,000 related to excess value of buildings and equipment. These assets have a remaining useful life of five years. During 2015 Beta had income of $40,000 and paid dividends of $10,000. Alpha uses the equity method in accounting for its ownership of Beta. On December 31, 2016 the trial balances of the companies are as follows:

Alpha Corporation Beta Company

Income statement $ 200,000 $ 120,000

COGS - 99,000 - 61,000

Depreciation expense - 25,000 - 17,400

interest expense -6,000 - 14,000

income from subsidiary $ 16,620

Consolidated net income $ 85,820 $ 27,600

Statement of Retained Earnings

Beginning Balance $ 228,560 $ 50,000

Net income $ 85,820 $ 27,600

Less: Dividends Declared -40,000 -10,000

Ending Balance $ 274,380 $ 67,600

Balance Sheet

Cash & A/R $ 81,400 $ 39,200

Inventory $ 60,000 $ 55,000

Investment in beta $124,370

Land $40,000 $ 30,000

Buildings & Equipment $504,000 $ 362,000

Accumulated depreciation - 168,000 -77,400

Total Assets $ 641,770 $ 408,800

Accounts Payable $86,190 $ 41,200

Bonds Payable $80,000 $ 200,000

Bond Premium $1,200

Common Stock $200,000 $ 100,000

Retained Earnings $274,380 $ 67,600

Total liabilities & Equity $641,770 $ 408,800

Beta sold inventory costing $45,000 to Alpha for $75,000 in 2015. Alpha held $9,000 in inventory at the end of 2015. Beta sold inventory costing $77,000 to Alpha in 2016 for $140,000 Alpha held $10,000 in inventory at the end of 2016.

On 1/1/2015 Alpha sold equipment with a book value of $10,000 to Beta for $14,000. The equipment orginally cost Alpha $18,000. The equipment has a remaining life of 5 years at 1/1/2015.

1. Prepare a allocation of acquisition value at the time of acquisition to determine any excess value.

2. Record the equity entries made by Alpha for 2015 and 2016.

3. Prepare the analysis and entries required for the worksheet in 2015 and 2016