E5-6 Majority-Owned Subsidiary Acquired at Higher than Book Value

Professor Corporation acquired 70 percent of Scholar Corporations common stock on December 31, 20X4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

Item	Professor Corporation	Scholar Corporation
Cash	$50,300	$21,000
Accounts Receivable	90,000	44,000
Inventory	130,000	75,000
Land	60,000	30,000
Buildings & Equipment	410,000	250,000
Less: Accumulated Depreciation	(150,000)	(80,000)
Investment in Scholar Corp.	102,200
Total Assets	$692,500	$340,000
Accounts Payable	$152,500	$35,000
Mortgage Payable	250,000	180,000
Common Stock	80,000	40,000
Retained Earnings	210,000	85,000
Total Liabilities & S/E	$692,500	$340,000

At the date of the business combination, the book values of Scholars assets and liabilities approximated fair value except for inventory, which had a fair value of $81,000, and buildings and equipment, which had a fair value of $185,000. At December 31, 20X4, Professor reported accounts payable of $12,500 to Scholar, which reported an equal amount in its accounts receivable.

Required:

1. Give the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination
2. Prepare a consolidated balance sheet worksheet.
3. Prepare a consolidate balance sheet in good form.