Dobroskey Company acquired 100 percent of Sparacios Company voting stock on January 1, 2016, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $14 per share). As of that date, Sparacio had stockholders equity totaling $105,000. Land shown on Sparacios accounting records was undervalued by $10,000. Equipment (with a 5-year remaining life) was undervalued by $5,000. A secret formula developed by Sparacio was appraised at $20,000 with an estimated life of 20 years.

Following are the separate financial statements for the two companies for the year ending December 31, 2020. There were no intra-entity payables on that date. Credit balances are indicated by parenthesis.

Dobroskey Sparacio

Revenues.. $(485,000) $ (190,000)

Cost of goods sold..160,000 70,000

Depreciation expense 130,000 52,000

Equity earnings of Sparacio(66,000) -0-

Net Income$ (261,000) $ (68,000)

Retained earnings, 1/1/20 $ (659,000) $ (98,000)

Net income (above) (261,000) 68,000

Dividends declared 175,500 40,000

Retained earnings, 12/31/20..$ (744,500) $ (126,000)

Current assets $ 268,000 $ 75,000

Investment in Sparacio Company 216,000 -0-

Land 427,500 58,000

Buildings and equipment (net) 713,000 161,000

Total assets $ 1,624,500 $ 294,000

Current Liabilities $ (110,000) $ (19,000)

Long-term liabilities (80,000) (84,000)

Common stock (600,000) (60,000)

Additional paid-in capital (90,000) (5,000)

Retained earnings, 12/31/20 (744,500) (126,000)

Total liabilities and equity $ (1,624,500) $ (294,000)

Requirements:

1. Construct Dobroskeys acquisition-date-fair-value allocation schedule for its investment in Sparacio.

B. Prepare a worksheet to consolidate the financial information for these two companies.