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Parlor Corporation acquired 70% of the outstanding common stock of Setting
Corporation on January 1, 20X3 for $178,000 cash. Immediately after this acquisition the
balance sheet information for the two companies was as follows :
Setting
Parlor
Book
Fair
Book Value
Value
Value
$ 32,000
$ 20,000
$ 20,000
Receivable-net
80,000
30,000
30,000
Inventories
70,000
30,000
50,000
Land
100,000
50,000
60,000
Buildings-net
110,000
70,000
90,000
Equipment-net
80,000
40,000
30,000
Assets
Cash
Investment in Setting
Total assets
178,000
-
-
$650,000
$240,000
$280,000
$ 90,000
$ 80,000
$ 80,000
10,000
50,000
40,000
500,000
100,000
50,000
10,000
$650,000
$240,000
Liabilities and Stockholders' Equity
Accounts payable
Other liabilities
Capital stock, $10 par
Retained earnings
Total equities
Required
1. Prepare a schedule to allocate the difference between the cost of the investment in
Setting and the book value of the interest acquired by Parlor to identifiable and
unidentifiable net assets.
2. Prepare a consolidated balance sheet for Parlor Corporation and Subsidiary at
January 1, 20X3.