FoxCorporation acquired 100 percent ownership of Lamb Products on January 1, 2018 for $200,000. On that date, Lamb reported retained earnings of $50,000 and had $10,000 of common stock outstanding and $90,000 of Paid in Capital. Fox has used the equity method of accounting for its investment in Lamb.

On the date of the business combination, the fair value of Lamb's depreciable assets were $20,000 more than book value. The differential assigned to depreciable assets is amortized over 10 Years. In addition, notes payable is overvalued by $15,000 and has a remaining life of 5 years. Any remaining acqusition differential is assigned to goodwill, which is not impaired at December 31, 2018.

There was $10,000 of intercompany receivables/payables as of 12/31/18

Required: carefully follow and label each step

1. Prepare the acquisition analysis as of acquisition date. compute the unamortized differential as of 1/1/2018 and the amortization for for 2018

2. Verify the calculation of the balance in the account equity in sub earnings and record the parent company entries with respect to its equity investment in sub

sco. ELIMINATIONS DR. CR. CONS.TOT. INCOME STATEMENT FYE 12/31/18 (000's) Sales Equity in sub earnings 200 100 Total revenues 225 100 Cost of goods sold Depreciation expense Other expenses 120 25 15 15 5 Total expenses 160 70 Net income 65 RETAINED EARNINGS STATEMENT Retained Earnings 1/1 50 Net income 30 89 Dividends declared Retained Earnings 12/31 333 70 BALANCE SHEET Cash and receivables Inventory Land Depreciable Assets Investment in Yellow goodwill 43 260 80 500 215 150 Accumulated depreciation (205) (105) Total assets 893 240 1,133 80 Accounts payable Notes payable 200 o 250 260 140 Common stock Paid in capital Retained earnings Noncontrolling interest in sub Total liabilities and equity 50 333 403 893 TRUE 240 TRUE 0 0 1,133 TRUE sco. ELIMINATIONS DR. CR. CONS.TOT. INCOME STATEMENT FYE 12/31/18 (000's) Sales Equity in sub earnings 200 100 Total revenues 225 100 Cost of goods sold Depreciation expense Other expenses 120 25 15 15 5 Total expenses 160 70 Net income 65 RETAINED EARNINGS STATEMENT Retained Earnings 1/1 50 Net income 30 89 Dividends declared Retained Earnings 12/31 333 70 BALANCE SHEET Cash and receivables Inventory Land Depreciable Assets Investment in Yellow goodwill 43 260 80 500 215 150 Accumulated depreciation (205) (105) Total assets 893 240 1,133 80 Accounts payable Notes payable 200 o 250 260 140 Common stock Paid in capital Retained earnings Noncontrolling interest in sub Total liabilities and equity 50 333 403 893 TRUE 240 TRUE 0 0 1,133 TRUE