On January $1,2015,$ Paro Company purchases $80\%$ of the common stock of Solar Com$-$

pany for $$320,000.$ On this date, Solar has common stock, other paid$-$in capital in excess of

par, and retained eamings of $$50,000,$$$100,000,$ and $$150,000,$ respectively. Net income and

dividends for rwo years for Solar Company are as follows:

On January $1,2015,$ the only undervalued tangible assets of Solar are inventory and the

building. Inventory, for which FIFO is used, is worth $$10,000$ more than cost. The inventory is

sold in $2015.$ The building, which is worth $$30,000$ more than book value, has a remaining life

of $10$ years, and straight$-$line depreciation is used. The remaining excess of cost over book value

is atriburable to goodwill.

The trial balances for Paro and Solar are as follows:

$1.$ Prepare a value analysis and a determination and distribution of excess schedule.

$2.$ Paro Company carries the investment in Solar Company under the sophisticated equity method. In general journal form, record the entries that would be made to apply the equity$$method in $2015$ and $2016.$