Case 8.2 Consolidation (225 points)

Paxton purchased an 80% interest in the Saxton Company on January 1, 20X4 for $692,000. On that date, Saxton had the following balance sheet:

Assets

Liabilities and Equity

Current assets

$190,000

Current liabilities

$100,000

Land

100,000

Building

300,000

Accum. Depreciation

(60,000)

Common stock (par)

100,000

Equipment

300,000

Paid-in-capital in excess of par

200,000

Accum. Depreciation

(30,000)

Retained earnings

400,000

Total assets

$800,000

Total liabilities and equity

$800,000

Fair values that differ from book values on the purchase date are:

Buildings

$400,000, 20 year remaining life

Equipment

$250,000, 10 year remaining life

Any remaining excess is attributed to goodwill

Instructions

The following worksheet is being prepared as of December 31, 20X6. That is 3 years after the purchase. 1. Prepare a price analysis and a determination and distribution of excess schedule and income distribution schedules 2. Complete the following worksheet. Be sure to number your entries and provide a brief description in the spaces provided below the income distribution schedules