Problem 4-23 (Static) (LO 4-1, 4-5, 4-6)

Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $900,000 cash. At the acquisition date, Stanfords total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date, Stanford's book value was $690,000.

Several individual items on Stanfords financial records had fair values that differed from their book values as follows:

Items	Book Value	Fair Value
Trade names (indefinite life)	$ 360,000	$ 383,000
Property and equipment (net, 8-year remaining life)	290,000	330,000
Patent (14-year remaining life)	132,000	272,000

For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies.

Account	Plaza	Stanford
Revenues	$ (1,400,000)	$ (825,000)
Cost of goods sold	774,000	395,750
Depreciation expense	328,000	36,250
Amortization expense	0	28,000
Equity in income of Stanford	(280,000)	0
Net income	$ (578,000)	$ (365,000)
Retained earnings, 1/1/24	$ (1,275,000)	$ (530,000)
Net income	(578,000)	(365,000)
Dividends declared	300,000	50,000
Retained earnings, 12/31/24	$ (1,553,000)	$ (845,000)
Current assets	$ 860,000	$ 432,250
Investment in Stanford	1,140,000	0
Trade names	240,000	360,000
Property and equipment (net)	1,030,000	253,750
Patents	0	104,000
Total assets	$ 3,270,000	$ 1,150,000
Accounts payable	$ (142,000)	$ (145,000)
Common stock	(300,000)	(120,000)
Additional paid-in capital	(1,275,000)	(40,000)
Retained earnings (above)	(1,553,000)	(845,000)
Total liabilities and equities	$ (3,270,000)	$ (1,150,000)

At year-end, there were no intra-entity receivables or payables.

Required:

Prepare a worksheet to consolidate the financial statements of Plaza, Incorporated, and its subsidiary Stanford.

Note: For accounts where multiple consolidation 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. Input all amounts as positive values.