### Book value of equity aquired and value implied

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##### Reference no: EM13147592

On january 1, 2010 porter company purchased an 80% interest in the capital stock of salem company for 850000. at that time, salem company had a capital stock for %550,000 and retained earnings for \$80,000. Differences between the fair value and the book value of the identifiable assets are salem company were as follows. Equipment \$130,000

Land 65000, and inventory 40,000. The book values of all other assets and liabilities of salem company were equal to their fair values on january 1,2010. The equipment had a remaining life of five years n Jan1. The inventory was sold in 2010. 2010 net income \$100,000; dividends declared of \$25,000. 2011 net incoe \$110,000; dividends declared \$35,000

Prepare a computation and allocation schedule for the difference between book value of equity aquired and the value implied by the pruchase price.

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