On December 31, 2011, PA. Inc. purchased 95 percent of Sub. Inc. for 120,000 cash. The Balance Sheet of each corporation just prior to the acquisition is presented below. Additionally, book value and fair value for all of Subs assets and liabilities are equal, with the exception of Property, Plant and Equipment, whose fair value is 47,000.

REQUIRED 1. Recording the purchase of Sub. Inc. by PA (the parent company). 2. What is the implied fair value of Sub Inc.? 3. Calculate the amount of Goodwill implicit in this purchase. 4. What is the amount of the non-controlling interest share in Sub Inc. at the date of acquisition? 5. What is the consolidated depreciation expense to be reflected in the consolidated Income Statement for 2012 assuming a 10 year depreciation life for property, plant and equipment? 6. Prepare the necessary work paper adjusting entries on the date of purchase. 7. Prepare a consolidated Balance Sheet immediately after this acquisition on 12/31/2011.

Table 1. Balance sheet before acquisition Balance Sheet