Question

Dotterel Corporation paid $200,000 cash for 40% of the voting common stock of Swamp Land Inc. on January 1, 2011. Book value and fair value information for Swamp on this date is as follows:

Book Fair

Assets Values Values

Cash $60,000 $60,000

Accounts receivable 120,000 120,000

Inventories 80,000 100,000

Equipment 340,000 400,000

$ 600,000 $ 680,000

Liabilities & Equities

Accounts payable $200,000 $200,000

Note payable 120,000 100,000

Capital stock 200,000

Retained earnings 80,000

$600,000 $300,000

Required:

Prepare an allocation schedule for Dotterel's investment in Swamp Land.

Answer

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