With a cash payment of $15 million and by issuing 500,000 shares of their own $1 par value common stock, Preston Company acquired a 100% of the outstanding common stock of Scalibrini, Inc. At the acquisition date, 1/1/20x0, Preston Companys common stock had a market value of $8/share.

At the time of the acquisition, the book value of Scalibrinis net assets was $16,970,000. There was no control premium in this transaction. Any amount of the acquisition price paid in excess of the fair value of the net assets acquired is assigned to goodwill.

At 1/1/20x0, Scalibrini, Inc. prepared the following analysis of the book value vs. the fair value of their non-current assets:

	Book	Fair	Remaining
	Value	Value	Useful Life
Land	$1,700,000	$2,550,000	-
Buildings	2,700,000	3,400,000	7 years
Equipment	3,700,000	3,300,000	5 years

Preston Company uses the equity method to account for the acquisition of Scalibrini, Inc. and, after the acquisition, Scalibrini, Inc. will be a separate operating subsidiary of Preston Company.

Following are the separate financial statements of Preston and Scalibrini, Inc. for the year ending 12/31/20x0:

	Preston	Scalibrini
	Company	Incorporated
Revenues	298,000,000	103,750,000
Expenses	271,000,000	95,800,000
Equity in income of Scalibrini, Inc.	8,000,000	0
Net income	35,000,000	7,950,000
Retained earnings, January 1, 20x0	2,300,000	100,000
Net income (above)	35,000,000	7,950,000
Dividends paid	4,800,000	3,000,000
Retained earnings, December 31, 20x0	32,500,000	5,050,000
Current Assets	24,850,500	20,800,000
Investment in Scalibrini, Inc.	22,450,000
Land	1,500,000	1,700,000
Buildings	5,600,000	2,360,000
Equipment (net)	3,100,000	2,960,000
Total assets	57,500,500	27,820,000
Accounts payable	3,100,000	4,900,000
Notes payable		1,000,000
Common stock	2,900,000	6,000,000
Additional paid-in capital	19,000,000	10,870,000
Retained earnings, Dec. 31, 20x0 (above)	32,500,000	5,050,000
Total liabilities and stockholders equity	57,500,000	27,820,000

1. Using the given information and an excel worksheet, prepare the worksheet to consolidate Preston Company and Scalibrini, Inc.

-For information purposes, the Controller of Preston Company asks that you briefly summarize the implications for the consolidation accounting and the consolidating adjusting entries of an intra-entity transfer of a depreciable asset, i.e. between Preston and Scalibrini.