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On January 1, 2013, Plymouth Corporation purchased an 80% interest in Salem Company for $1,200,000. A summary of Salems balance sheet on that date revealed

On January 1, 2013, Plymouth Corporation purchased an 80% interest in Salem Company for $1,200,000. A summary of Salems balance sheet on that date revealed the following:

Book Value Fair Value Receivables $ 200,000 $ 200,000 Inventory 350,000 370,000 Equipment 500,000 650,000 Land 245,000 330,000 $ 1,295,000 $ 1,550,000 Liabilities $ 295,000 Common stock 500,000 Retained earnings 500,000 $ 1,295,000

The equipment had an original life of 20 years and has a remaining useful life of 10 years.

A. Calculate the difference between implied and book value B. Determine the allocation of the difference between implied and book value C. For the December 31, 2013, prepare the workpaper entry to assign, amortize, and depreciate the difference between implied and book value

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