Problem 11 On January 1, 2010, P Company purchased an 80% Company had and the book value of the identifiable assets of Salem Company were as follows: interest in S Company for 900.000. At that time, s capital stock of $550,000 and retained earnings of $100,000. Differences between the fair valu Fair Value in Excess of Book Value Equipment Land Inventory $ 100,000 60,000 50,000 The book values of all other assets and liabilities of s Company were equal to their fair values on January 1 2010. Th e equipment had a remaining life of five years. The inventory was sold in 2010. S Company's net income and dividends declared in 2010 was as follows: 2010 Net Income of $120,000; Dividends Declared $30,000. Required: Prepare J/E and W/P at the date of acquisition Prepare J/E under cost method and W/Ps at end of 2010. (Make sure you include the W/P for eliminating the differences (IBV-BV) as well as the dividends). Problem 11 On January 1, 2010, P Company purchased an 80% Company had and the book value of the identifiable assets of Salem Company were as follows: interest in S Company for 900.000. At that time, s capital stock of $550,000 and retained earnings of $100,000. Differences between the fair valu Fair Value in Excess of Book Value Equipment Land Inventory $ 100,000 60,000 50,000 The book values of all other assets and liabilities of s Company were equal to their fair values on January 1 2010. Th e equipment had a remaining life of five years. The inventory was sold in 2010. S Company's net income and dividends declared in 2010 was as follows: 2010 Net Income of $120,000; Dividends Declared $30,000. Required: Prepare J/E and W/P at the date of acquisition Prepare J/E under cost method and W/Ps at end of 2010. (Make sure you include the W/P for eliminating the differences (IBV-BV) as well as the dividends)