Peace Corporation acquired 100 percent of Harmony Inc in a nontaxable transaction on December 31, 20X1. The following balance sheet information is available immediately following the transaction:

	Peace Corporation						Harmony Inc
	Book Value			Fair Values			Book Value			Fair Values
Cash	$	30,000		$	30,000		$	8,000		$	8,000
Accounts Receivable, net		50,000			50,000			12,000			12,000
Inventory		75,000			82,000			7,000			10,000
Deferred Tax Asset		8,000						1,000			?
Investment in Harmony		60,000			60,000
Equipment, net		160,000			195,000			25,000			40,000
Patent								0			20,000
Total Assets	$	383,000					$	53,000
Accounts Payable	$	62,000		$	62,000		$	13,000		$	13,000
Accrued Vacation Payable		15,000			15,000
Deferred Tax Liability		6,000						2,000			?
Long-Term Debt		100,000			110,000			8,000			8,000
Common Stock		150,000						20,000
Retained Earnings		50,000						10,000
Total Liabilities and Equity	$	383,000					$	53,000

Additional Information

1.	The current and future effective tax rate for both Peace and Harmony is 40 percent.
2.	The recorded deferred tax asset for Peace relates to the booktax differences arising from the allowance for doubtful Accounts and the Accrued vacation payable. The expenses associated with each of these amounts will not be deductible for tax purposes until the related accounts receivable are written off or until the employee vacation is actually paid out.
3.	The recorded deferred tax asset for Harmony is related solely to the booktax difference arising from the allowance for doubtful accounts.
4.	The recorded deferred tax liability in both Peace and Harmony relates solely to the booktax differences arising from the depreciation of their respective equipment.
5.	Accumulated depreciation on the financial accounting records of Peace and Harmony is $40,000 and $10,000, respectively.
6.	The Harmony patent was identified by Peace in the due diligence process and has not previously been recorded in the accounting records of Harmony.
7.	The book and tax bases of all other assets and liabilities of Peace and Harmony are the same.

Required:

a.	Compute the tax bases of the assets and liabilities for Peace and Harmony, where different from the amounts recorded in the respective accounting records.

b.	Compute the fair value of the deferred tax assets and deferred tax liabilities for Harmony.

c.	Prepare all of the consolidation entries needed to prepare the worksheet for Peace and Harmony at the date of acquisition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

d.

Prepare the consolidation worksheet for Peace and Harmony at the date of acquisition. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)