Fairview Corporation, a U$.$S$.$ company, has a wholly$-$owned subsidiary in Mexico. The subsidary's functional currency is the Mexican peso, and translation to U$.$S$.$ dollars is appropriate. The subsidiary was acquired for $$10,800,000.$ The balance sheet of the subsidiary on the date of acquisition is as follows:

Mexican Subsidiary

Balance Sheet at Date of Acquisition

Assets

Cash and receivables P$9,000,000$

Inventories $21,000,000$

Noncurrent assets, net $45,000,000$

Total assets P$75,000,000$

Liabilities and stockholders' equity

Liabilities P$15,000,000$

Capital stock $48,000,000$

Retained earnings $12,000,000$

Total liabilities and stockholders' equity P$75,000,000$

The fair values of the subsidiary's inventories are P$30,000,000,$ and the fair values of the subsidiary's noncurrent assets are $42,000,000.$ All other amounts are reported at approximate fair value. The exchange rate at the date of acquisition is $$0\mathrm{.}10/$peso$.$

Present a schedule showing the calculation of goodwill for the acquisition, in U$.$S$.$ dollars, and the entries necessary to consolidate the balance sheets of Fairview and its subsidiary at the date of acquisition.

Instructions:

Enter all your answers below in thousands. For example, P$108,000,000$ equals P$108,000$ in thousands.

Do not use negative signs with any of your answers below.

Calculation of goodwill $($in thousands$)$

P $$/$P U$.$S$.$$

Price Paid Answer

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Book value Answer

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Undervaluation of inventories Answer

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Overvaluationof noncurrent assets Answer

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Goodwill Answer

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Enter answers in thousands.

ConsolidationJournal

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$($E$)$

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Retained earnings Answer

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$($R$)$

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Goodwill Answer

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Noncurrent Assets Answer

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