On January 1, 20X1, P Co. acquired 90% of the common stock of S Co. for $450,000.

On this date, S Co.'s stockholders' equity included common stock of $50,000, additional

paid-in-capital of $270,000, and retained earnings of $80,000 (for a total of $400,000).

S Co. book values and fair value were equal on January 1, 20X1 except as follows:1) Equipment: Total fair value exceeded book value by $40,000. This equipment had a five year life remaining on the January 1, 20X1 purchase date and is being depreciated on a straight-line basis with $0 salvage value.

2) Copyrights: The total fair value of copyrights not recorded by S Co. on January 1,20X1 was $24,000. The copyrights had a four year life remaining on January 1, 20X1.

3) Inventory: Total fair value exceeded book value by $5,000 on January 1, 20X1. This inventory was sold during 20X1 by S Co.

Any additional excess of price paid for the investment is attributable to goodwill.

On January 1, 20X2, P Co. held merchandise acquired from S Co. for $5,000. During 20X2, S Co. sold merchandise to P Co. for $40,000, $3,000 of which is still held by P Co. on December 31, 20X2. S Co.'s gross profit on sales rate is 40%. At December 31, 20X2, P Co. still owes S Co. $10,000 for these purchases.

On January 1, 20X2, P Co. sold equipment to S Co. at a gain of $60,000. During 20X2, the equipment was used by S Co. Depreciation is being computed using the straight-line method, a five-year life, and no salvage value.

Complete Value Analysis, Determination and distribution of excess schedule. amortization schedule, and consolidated balance sheet