On January 1, 2015, Palmer Company acquires an 80% interest in Stevens Company at cost of $4, 000, 000. at purchase date, Stevens Companys stockholdersequity consists as following:

common stock - $2, 000, 000 and retained earning - $1, 000, 000

An examination of Stevens Com,panys assets and liabilities revealed the following:

	Book value $	Fair Value $
current assets	600 000	600 000
bonds	400 000	400 000
inventory	400 000	200 000
machinery	12 000 000	11 000 000 (net)
accumulated deprecation	(2 000 000)
equipment	2 000 000	600 000 (net)
accumulated deprecation	(600 000)
land	1 000 000	3 000 000

Stevens Companys machinery remaining useful life is 20 years and equipment remaining useful lise is 10 years. From inventory 80% was sold during 2015, rest of during 2016.

During year 2015 Palmer company sells merchandise to Stevens Company in value 1, 000, 000 (acquisition cost $880 000) and Stevens Company sells merchandise to Palmer Company in value $600, 00 (acquisition cost $300 000)

During year 2016 Palmer company sells mercandise to Stevens Company in value 1, 300, 000 and Stevens Company sells mercandise to Palmer Company in value $800 000. Sales gross margin was same as year 2015.

unsold inventory year-end (consolidated)	2015	2016
Palmer	80 000	40 000
Stevens	100 000	60 000

Year-end unsold inventory was sold during next year.

On October 2, 2015, Stevens Company sold to Palmer Company machine what acquisition cost was $40, 000 with price $24, 000 (machine net value $20, 000). Machine remaining useful life is 5 years.

On March 1, 2016, Stevens Company sold to Palmers Company land with price $200, 000 (acquisition cost $100, 000)

With 31.12.16 Palmers comapany receivables includes Stevens Company debt is sum $20, 000.

Financial statement data with 31.12.2016 is following:

	Palmers $	Stevens $
cash	400 000	300 000
receivables	600 000	500 000
bonds	200 000	400 000
inventory	600 000	500 000
investment - Stevens	4 000 000
machinery	20 000 000	12 000 000
accumulated deprecation	(10 000 000)	(2 500 000)
equipment	4 200 000	2 000 000
accumulated deprecation	(2 200 000)	(740 000)
land	800 000	900 000
cost of sold goods	(3 200 000)	(2 800 000)
deprecation	(700 000)	(640 000)
other expenses	(800 000)	(520 000)
dividends	(240 000)	(140 000)
TOTAL	23 540 000	17 460 000
accounts payable	1 136 000	1 400 000
long-term payables	1 680 000	8 200 000
common stock	13 800 000	2 000 000
sales	5 400 000	4 600 000
retained earnings	1 412 000	1 160 000
gain from land sales		100 000
dividends income	112 000
TOTAL	23 540 000	17 460 000

1. Prepare a Computation and Allocation Schedule for the difference between book value of equity acquired and the value implied by the purchase price.
2. Prepare elimination transactions with 31.12.15
3. Prepare elimination transaction with 31.12.16
4. Prepare consolidation worksheet with 31.12.16 elimination entries and calculates consolidated financial statement with 31.12.16

PS! Accumulated deprecation must be presented on a separate row in the workpaper and in cosolidated statement of financial positions.