Exercise 5-1

On January 1, 2013, Pam Company purchased an 85% interest in Shaw Company for $539,300. On this date, Shaw Company had common stock of $396,600 and retained earnings of $142,700. An examination of Shaw Companys assets and liabilities revealed that their book value was equal to their fair value except for marketable securities and equipment:

		Book Value		Fair Value
Marketable securities		$20,000		$44,900
Equipment (net)		119,600		140,600

(a) Prepare a Computation and Allocation Schedule for the difference between book value of equity acquired and the value implied by the purchase price. (Round answers to 0 decimal places, e.g. 5,125.)

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(a) Prepare a Computation and Allocation Schedule for the difference between book value of equity acquired and the value implied by the purchase price. (Round answers to o decimal places, e.g. 5,125.) Parent Share Non- Controlling Share Entire Value