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On January 1, 2019, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill.

Following are the individual financial records for these two companies for the year ended December 31, 2022. Revenues Expenses Equity in subsidiary earnings Net income Retained earnings, January 1, 2022 Net income (above) Dividends paid Retained earnings, December 31, 2022 Current assets Investment in Spaulding Inc. Buildings (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, December 31, 2022 (above) Total liabilities and stockholders' equity Rand Corp. ($372,000) $264,000 ($25,000) ($133,000) ($765,000) ($133,000) $84,000 ($814,000) $150,000 $242,000 $525,000 $389,250 $1,306,250 ($82,250) ($360,000) ($50,000) ($814,000) ($1,306,250) Spaulding Inc ($108,000) $72,000 $0 ($36,000) ($102,000) ($36,000) $24,000 ($114,000) $22,000 $0 $85,000 $129,000 $236,000 ($50,000) ($72,000) $0 ($114,000) ($236,000) Required: 1. Show the Schedule of Acquistion-Date Fair-Value Allocation. 2. Show the Schedule of Excess Amortization. 3. Prepare a consolidation worksheet for this business combination. Rand Corportation and Consolidated Subsidiary Consolidation Worksheet For the Year Ended December 31, 2022 Consolidation Entries Debit Credit Accounts Rand Corp Spaulding Inc Consolidated 0 Revenues Expenses Equity in subsidiary earnings Net Income ($372,000) $264,000 ($25,000) ($133,000) ($480,000) $347,000 ($108,000) $72,000 $0 ($36,000) 0 11,000 25,000 Statement of Retained Earnings Retained earnings 1/1 Net Income (Above) Dividends paid Retained earnings 12/31 ($765,000) ($133,000) $84,000 ($814,000) ($102,000) ($36,000) $24,000 ($114,000) Balance Sheet Current assets Investment in Spaulding, Inc $150,000 $242,000 $22,000 $0 Buildings (net) Equipment (net) Goodwill Total Assets $525,000 $389,250 $0 $1,306,250 $85,000 $129,000 $0 $236,000 Liabilities Common Stock Additional paid-in capital Retained Earnings, Dec 31 (above) Total Liabilities & Equity ($82,250) ($360,000) ($50,000) ($814,000) ($1,306,250) ($50,000) ($72,000) S $0 ($114,000) ($236,000) Schedule of Acquistion-Date Fair-Value Allocation 1/1/2019 Schedule of Excess Amortization SAIDE