On January 1, 2020, Pilsner Company acquired a 90% interest in Smalley Company for $3,600,000. On that date, Smalley Company had common stock of $800,000 and retained earnings of $2,800,000. The book values of assets and liabilities were equal to fair values except for the following:

Book ValueFair Value

Inventory$50,000$ 56,000

Supplies8,0006,000

SalariesPayable3,5004,100

Equipment(net)540,000620,000

Land300,000460,000

The inventory was sold in 2020. The equipment had an estimated remaining useful life of 8 years. Pilsner Company uses the cost method to record its investment in Smalley Company.

Required:

Prepareallthe workpaper entry to allocate, amortize, and depreciate the difference between implied and book value on: (a) 1/1/2020,

(b) 12/31/2020 and

(c)12/31/2021.