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On January 1, 20X1, Parent Company purchased 100% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $240,000.

On January 1, 20X1, the excess of cost over book value is due to a $15,000 undervaluation of inventory, to a $5,000 overvaluation of Bonds Payable, and to an undervaluation of land, building and equipment. The fair value of land is $50,000. The fair value of building and equipment is $200,000. The book value of the land is $30,000. The book value of the building and equipment is $180,000. The fair value of identifiable net assets is $300,000 as determined from the worksheet as presented below:

	Trial Balance Trial Balance		Eliminations and
	Parent	Sub.	Adjustments
Account Titles	Company	Company	Debit		Credit
Assets:
Inventory	50,000	30,000
Other Current Assets	239,000	165,000
Investment in Subsidiary	280,000
Land	120,000	30,000
Buildings	350,000	230,000
Accumulated Depreciation	(100,000)	(50,000)
Other Intangibles	40,000
Total	979,000	405,000
Liabilities and Equity:
Current Liabilities	191,000	65,000
Bonds Payable		100,000
Common Stock

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