Priya Corporation acquired 100 percent of Sheldon Company stock on January 1, 2022 for $1,187,800 cash.

Following are pre-closing trial balance amounts for Priya Corporation and Sheldon Company as of December 31, 2022:

	PRIYA CORPORATION		SHELDON COMPANY
	Debit	Credit	Debit	Credit
Cash	501,800		249,900
Accounts receivable	294,000		197,000
Inventory	473,000		269,000
Investment in Sheldon Corp.	1,406,010
Buildings	625,000		252,500
Land	807,000		287,000
Equipment	315,000		345,000
Cost of goods sold	342,000		237,500
Depreciation Expense, Building	58,600		18,600
Depreciation Expense, Equipment	41,300		25,700
Selling & Administrative Expense	159,000		64,800
Dividends Declared	60,000		45,000
Accumulated Depreciation, Bldg		243,400		55,800
Accumulated Depreciation, Equip		156,200		77,100
Accounts Payable		178,000		99,300
Bonds Payable		515,000		180,400
Common Stock ($1 par)		659,000		275,000
Additional paid in capital		1,374,800		375,000
Retained earnings (01/01/2022)		788,500		250,000
Sales		788,500		683,000
Income from Sheldon Corp.		297,210
Totals	5,082,710	5,082,710	1,995,600	1,995,600

Additional Information:

On January 1, 2022 the fair market value of Sheldon's assets equaled their book value with the exception of: Inventory - was overvalued by $8,100 (all this inventory was sold during 2022). Building - was overvalued by $19,100 (remaining useful life was estimated to be 10 years) . Land - was by undervalued $53,000. Equipment - was undervalued by $87,000 (remaining useful life was estimated to be 5 years). The new Goodwill from the acquisition was impaired by $28,200 at year-end.

Priya Corporation uses the (full) equity method to account for its Investment in Sheldon Company.

The general ledger numbers given above (HINT: those in boldface) include the effects of the JOURNAL ENTRIES that were recorded by Priya at the acquisition date and during 2022 to account for its investment in Sheldon Company. These boldface figures should be used a check figures in your solution.

Required: (CLEARLY SHOW ALL OF YOUR WORK).

Analyze the Investmentin Sheldon account as of the acquisition date. Determine the total "driferential" and then break this mount out into the excess cost detail and (new) goodwill components.

NORDER TO RECEIVE FULL CREDIT FOR YOUR ANSWER, BE SURE TO CLEARLY LABEL YOUR DETAIL FOR THE IDENTIFIABLE EXCESS, INCLUDING THE ASSET NAME AND WHETHER THE ASSET IS UNDERVALUED OR OVERVALUED.

REQUIRED: (CLEARLY SHOW ALL OF YOUR WORK).

a. Prepare the Investment Analysis for Priya Company's Investment in Sheldon account AT JANUARY 1, 2022 (10 POINTS)

Fair Value of Consideration given from Priya Company to Sheldon's Shareholders:

MINUS:

Book Value of Sheldon Company's Net Identifiable Assets

EQUALS:

Differential (= Excess Value).

MINUS:

Net Identifiable Excess

EQUALS:

NEW GOODWILL

b. Recreate the 4 JOURNAL ENTRIES recorded by Priya with regard to its investment in Sheldon Company at January 1, 2022 and during 2022, IN ORDER TO RECEIVE FULL CREDIT FOR YOUR ANSWER, BE SURE TO SHOW YOUR WORK FOR THE NUMBERS INCLUDED IN THE AMORTIZATION OF EXCESS VALUE JOURNAL ENTRY.