Computation of Goodwill $($if any$)$ Fair Value of Consideration transferred $(10,000$ x $$14)$ Book value of S Co$.$ Excess fair value over book $$ Allocated to Land Allocated to equipment Allocated to secret formula $$ Goodwill Analysis of Subsidiary earnings Bradford Company net income Additional equipment depreciation $($$$5,000/5$years$)$ Additional formula depreciation $($$$20,000/20$ years$)$ Equity in subsidiary earnings on parent books Problem $35$ Journal Entries Consolidation Entry S: $$ Common Stock $$ Paid in Capital $$ Retained Earnings $($Beginning$)$ Investment in Bradford Company $$ Eliminate subsidiary equity $($beginning retained earnings$)$ Consolidation Entry A: $$ Building $$ Land $$ Formula $$ Investment in Bradford Company $$ Allocate subsidiary acquisition date fair value adjustments. $$ The financial statement given is for $2018.$ Therefore four years depreciation and amortization $(2014$ thru $2018)$ have already been taken.$$ That leaves a fair value excess of $$1,000$ for equipment and $$16,000$ for formula.$$ As land is not depreciated it gets the full $$10,00.$ Consolidation Entry I: $$ Equity in Subsidiary Earnings $$ Investment in Bradford Company $$ Eliminate equity income $-$ The entire equity income $$ recorded in the parent Allen Company must be eliminated. $$ Consolidation Entry D: $$ Investment in Bradford Company $$ Dividends Paid $$ Eliminate intercompany dividend $$ Consolidation Entry E: $$ Depreciation Expense $-$ Equipment $$ Amortization Expense $-$ Formula $$ Formula $$ Equipment $$ Recognize current year excess fair value expenses.cess