On January 2, 20X8, Cuff Corporation acquired 80% percent of Link Corporations outstanding common stock. In exchange for Links stock, Cuff paid $600,000 directly to the selling stockholders of Link. This deal was financed with a Note Payable that Cuff received. At that date, the fair value of the noncontrolling interest was $150,000. The two companies continued to operate as separate entities subsequent to the combination. Immediately prior to the combination, the book values and fair values of the companies assets and liabilities were as follows: Cuff Corporation. Link Corporation Book Value Fair Value Book Value Fair Value Cash $ 12,000 $ 12,000 $ 2,000 $ 9,000 Receivables 41,000 39,000 31,000 30,000 Allowance for Bad Debt (2,000) (1,000) Inventory 86,000 89,000 68,000 73,000 Land 55,000 200,000 50,000 70,000 Buildings & Equipment 960,000 650,000 670,000 500,000 Accumulated Depreciation (411,000) (220,000) Patent 40,000 Total Assets $741,000 $990,000 $600,000 $721,000 Current Payables $238,000 $238,000 $122,000 $ 129,000 Common Stock 300,000 200,000 Additional Paid-In Capital 100,000 130,000 Retained Earnings 103,000 148,000 Total Liabilities & Equity $741,000 $600,000 At the date of combination, Cuff owed Link $6,000 plus accrued interest of $500 on a short-term note. Both companies have properly recorded these amounts.

Required a. Record the business combination on the books of Cuff Corporation. Hint: This is the entry that Cuff makes on its books to record the investment. There is a sheet created in the workbook provided for your entry (a. JE to record Investment). b. Present in general journal form all consolidation entries needed in a worksheet to prepare a consolidated balance sheet immediately following the business combination on January 2, 20X8. See sheet labeled b. Consolidating Entries. c. Prepare and complete a consolidated balance sheet worksheet as of January 2, 20X8, immediately following the business combination. Hint: The final column of your consolidating worksheet if done correctly should reflect your consolidated balance sheet. You can copy the decriptions and amounts from the consolidating worksheet