Paulcraft Corporation builds large powerboats. On January 1 2011 Paulcraft acquires Switzer Corporation, a company that manufactures smaller power boats. Paulcraft pays cash in exchange for Switzer common stock. Switzer has the following balance sheet on January 1 2011:

Switzer Corporation

Balance Sheet

January 1, 2011

Assets

accounts receivable $82,000

Inventory 40,000

Buildings 60,000

Accumulated depreciation (50,000)

Equipment 100,000

Accumulated depreciation (30,000)

Total Assets $402,000

Liabilities and equity

current liabilities $90,000

Bonds payable 100,000

Common stock ($1 par) 10,000

Paid-in capital in excess of par 90,000

Retained earnings 112,000

Total liabilities and equity $402,00

Appraisal values for identifiable assets and liabilities are as follows:

Accounts receivable $82,000

Inventory (sold during 2011) 38,000

Land 150,000

Buildings (20 year life) 280,000

Equipment (5 year life) 100,000

Current liabilities 90,000

Bonds payable (5 year life) 96,000

Any remaining excess is attributed to goodwill.

Assume that Paulcraft pays $480,000 for 100% of Switzer common stock. Paulcraft uses the cost method to account for its investment in Switzer. Paulcraft and Switzer have the following trial balances on December 31 2013:

Paulcraft

cash 100,000

Accounts receivable 90,000

Inventory 120,000

Land 100,000

Investment in Switzer 480,000

Buildings 800,000

Accumulated depreciation (220,000)

Equipment. 150,000

Accumulated depreciation (90,000)

Current liabilities (60,000)

Common stock (100,000)

Paid-in capital in excess of par (900,000)

Retained earnings, January 1, 2013 (315,000)

Sales (800,000)

Cost of goods sold 450,000

Depreciation expense-building 30,000

Depreciation expense-equipment 15,000

other expenses 140,000

Dividend income (10,000)

Dividends declared 20,000

Total 0

Switzer

cash 110,000

Accounts receivable 55,000

Inventory 86,000

Land 60,000

Buildings 250,000

Accumulated depreciation (80,000)

Equipment 100,000

Accumulated depreciation (72,000)

Current liabilities (102,000)

Bonds payable (100,000)

Common stock (10,000)

Paid-in capital in excess of par (90,000)

Retained earnings, January 1, 2013 (182,000)

Sales (350,000)

Cost of goods sold 210,000

Depreciation expense- buildings 15,000

Depreciation expense-equipment 14,000

Other expenses 68,000

Interest expense 8,000

Dividends declared 10,000

Total 0

1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Switzer.

2. Complete a consolidated worksheet for Paulcraft Corporation and its subsidiary Switzer Corporation as of December 31, 2013. Prepare supporting amortization and income distribution schedules.