Problem 3: 10 points Mercedes Co. acquired all of the common stock of Tesla Co. on January 1, 2018. As of that date, Tesla had the following trial balance:

Book Value Fair Value

Current Assets $50,000 $50,000

Land $50,000 $100,000

Buildings (20 years) $200,000 $300,000

Equipment(10 years) $100,000 $80,000

Net Income year ended 12/31/18 $100,000

Dividends year ended 12/31/18 $10,000

Common Stock-Tesla ($10 par value) $50,000

Additional Paid-In Capital (5,000 shares outstanding) $250,000

Retained Earnings, 1/1/18 $100,000

Assume that Mercedes Co. acquired the common stock of Tesla for $600,000 in cash. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to goodwill. Mercedes is using the equity method for this investment. NOTE: You will get no credit if I cant read your answer.:

(P3i) Prepare the S Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.)

(P3ii) Prepare the I Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.)

(P3iii) Prepare the E Entry for 12/31/2018 (Write the journal entry, print the name of the account(s) and write the dollar amounts clearly.) (Show below all calculations to get full credit.)