Reference no: EM131746126
On January 1, 2015, Payne Corporation purchased a 75% interest in Salmon Company for $585,000. A summary of Salmon Company's balance sheet on that date revealed the following:
Book Value Fair Value
Equipment $525,000 $705,000
Other assets 150,000 150,000
$675,000 $855,000
Liabilities $75,000 $75,000
Common stock 225,000
Retained earnings 375,000
$675,000The equipment had an original life of 15 years and has a remaining useful life of 10 years.
For the December 31, 2015, consolidated financial statements workpaper, prepare the workpaper entry to allocate and depreciate the difference between book value and the value implied by the purchase price assuming:
a) Equipment is presented net of accumulated depreciation.