On January 1, 2011 ABC Company acquired XYZ Company ABC paid $300,000 for 80% of XYZ common stock. On the date of acquisition, XYZ had the following balance sheet: Assets Liabilities and Equity Accounts receivable Inventory S 50,000 60,000 100,000 Land Accounts payable Bonds payable Common stock (S1par) Paid in capital in excess of par Retained earings $ 60,000 200,000 10,000 90,000 60,000 150,000 Buildings Accumulated depreciation Equipment Accumulated depreciation Goodwill (50,000) 100,000 (30,000) 40,000 Total Assets $420,000 Total liabilities and Equity $420,000 Buildings, which have a 20-year life, are understated by $100,000. Equipment, which has a 5. year life, is understated by S50,000. Any remaining excess is goodwill. ABC uses the simple method to account for its investment in XYZ. On January 1, 2013, XYZ held merchandise sold to it from ABC for $12,000. This beginning inventory had an applicable gross profit of 35%. During 2013, ABC sold merchandise to XYZ for $55,000. On December 31, 2013, XYZ held $10,000 of this merchandise in its inventory. This ending inventory had an applicable gross profit of 40%. XYZ owed ABC $7,500 on December 31 as a result of this intercompany sale. ABC held $16,000 worth of merchandise in its January 1, 2013, inventory from sales from XYZ This beginning inventory had an applicable gross profit of 30%. During 2013 XYZ sold merchandise to ABC for $35,000. ABC held $20,000 of this inventory at the end of the year. This ending inventory had an applicable gross profit of 35%. ABC owed XYZ $5,000 on December 31 as a result of this intercompany sale. On January 1, 2011, ABC sold equipment to XYZ at a profit of $40,000. Depreciation on this equipment is computed over an 8-year life using the straight-line method. On January 1, 2012 XYZ sold equipment with a book value of $30,000 to ABC for $54,000. This equipment has a 6-year life and is depreciated using the straight-line method, ABC and XYZ had the following trial balances on December 31, 2013. XYZ Company Company Cash Account receivable Inventory 53,500 53,000 81,000 60,000 Land 195,400 140,000 140,000 100,000 443,600 800.000 (280,000) 150,000 (115,000) (25,000) Investment in XYZ Company Buildings Accumulated Depreciation Equipment Accumulated Depreciation Goodwill Accounts Payable Bonds Payable Common Stock Paid in capital in excess of par Retained Earnings, January 1, 2013 Sales Cost of Goods Sold Depreciation Expense - Buildings Depreciation Expense - Equipment Other Expenses Interest Expense Subsidiary Income Dividends Declared Totals (100,000) (800,000) (510,000) (850,000) 480,000 30,000 15,000 210,000 150,000 (65,000) 220,000 (103,000) 40,000 (50,000) (100,000) (10,000) (90,000) (169,500) (500,000) 290,000 5,000 23,000 94,000 8,000 (64,000) 40,000 10,000 1. Prepare a value analysis and a determination and distribution of excess for the investment in XYZ 2. Complete a consolidated worksheet for ABC Company and its subsidiary XYZ Company as of December 31, 2013. Prepare supporting amortization and income distribution schedules