On December 31, 20x7, PA. Inc. purchased 90 percent of S Company for 240,000 cash. The Balance Sheet of each corporation just prior to the acquisition is presented below. Additionally, book value and fair value for all of S assets and liabilities are equal, with the exception of Property, plant and equipment, whose fair value is 94,000.

Table 1. Balance sheet before acquisition

REQUIRED

1. Recording the purchase of S Company by P Company.
2. What is the implied fair value of S Company?
3. Calculate the amount of Goodwill implicit in the purchase.
4. What is the amount of non-controlling interest share in S Company at the date of acquisition?
5. What is the consolidated depreciation expense to be reflected in the consolidated income statement for 20x8 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 12/31/20x

P Company S Company ASSETS Current assets Cash Accounts receivable (net) Inventory Total current assets 1 Noncurrent assets Property, plant and equipment TOTAL ASSETS P 340,000 120,000 100,000 P 560,000 P 42,000 90,000 90,000 P 222,000 530,000 P 1,090,000 84,000 P 306,000 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Current liabilities Accounts payable Accruals Total current liabilities P 140,000 40,000 P 180,000 P 60,000 30,000 P 90,000 Noncurrent liabilities Bonds payable Total liabilities 360,000 P 540,000 P90,000 Shareholders' equity Common stock P 200,000 P 110,000 Additional paid-in capital 40,000 16,000 Retained earnings 310,000 90,000 Total shareholders' equity P 550,000 P 216,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY P 1,090,000 P 306,000