Reference no: EM132471607

Pop Corporation paid $1,680,000 for a 30 percent interest in Son Corporation's outstanding voting stock on January 1, 2016. The book values and fair values of Son's assets and liabilities on January 1, along with amortization data, are as follows (in thousands):

• Cash Accounts receivable-net Inventories (sold in 2016) Other current assets Land Buildings-net (10-year remaining life) Equipment-net (7-year remaining life) Total assets Accounts payable Other current liabilities Bonds payable (due January 1, 2021) Capital stock, $10 par Retained earnings Total equities Book Value Fair Value $ 400 700 1,000 200 900 1,500 1,200 $5,900 $ 800 200 1,000 3,000 900 $5,900 Son Corporation reported net income of $1,200,000 for 2016 and paid dividends of $600,000.

REQUIRED

Question 1. Prepare a schedule to allocate the investment fair values/book value differentials relating to Pop's invest-ment in Son.

 

Question 2. Calculate Pop's income from Son for 2016.

 

Question 3. Determine the balance of Pop's Investment in Son account at December 31, 201