On January 1, 2019, Plymouth Corporation purchased a 70% interest in Salem Company for $700,000. A summary of Salems balance sheet on that date revealed the following:

Book ValueFair Value

Receivables/Cash$ 100,000$ 100,000

Inventory350,000 350,000

Equipment500,000 650,000

Land 250,000 330,000

$1,200,000

$ 1,430,000

Liabilities$ 300,000

Common stock 500,000

Retained earnings 400,000

$1,200,000

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 January 1, 2019, Prepare the eliminating/adjusting entries needed on the consolidated workpaper.

D. Now consider the following as the Balance sheet of Plymouth as of January 1, 2019, consolidate.

Receivables/Cash$ 500,000

Inventory800,000

Investment in Sub700,000

Equipment800,000

Land 900,000

$3,700,000

Liabilities$ 1,000,000

Common stock1,300,000

Retained earnings 1,400,000

$3,700,000