P Corporation paid $420,000 for 70% of S Corporation’s $10 par common stock on December 31, 2013, when S Corporation’s stockholders’ equity was made up of $300,000 of Common Stock, $90,000 of Other Contributed Capital and $60,000 of Retained Earnings. S’s identifiable assets and liabilities reflected their fair values on December 31, 2013, except for S’s inventory which was undervalued by $60,000 and their land which was undervalued by $25,000. Balance sheets for P and S immediately after the business combination are presented in the partially completed work-paper below.

Eliminations

P

S

Debit

Credit

Noncontrolling Interest

Consolidated Balances

ASSETS

Cash

$40,000

$30,000

Accounts

receivable-net

30,000

45,000

Inventories

185,000

165,000

Land

45,000

120,000

Plant assets-

net

480,000

240,000

Investment in

S Corp.

420,000

Difference between implied and book value

Goodwill

Total Assets

$1,200,000

$600,000

EQUITIES

Current

liabilities

$170,000

$150,000

Capital stock

600,000

300,000

Additional paid-in capital

150,000

90,000

Retained earnings

280,000

60,000

Noncontrolling interest

Total Equities

$1,200,000

$600,000