Prepare allocation schedule with book value greater than fair value
PJ Corporation pays $5,400,000 for an 80 percent interest in Sof Corporation on January 1, 2011, at which time the book value and fair value of Sof’s net assets are as follows (in thousands):
|
Book Value |
Fair Value |
|
|
Current assets |
$2,000 |
$3,000 |
|
Equipment—net |
4,000 |
6,000 |
|
Other plant assets—net |
2,000 |
2,000 |
|
Liabilities |
(3,000) |
(3,000) |
|
Net assets |
$5,000 |
$8,000 |
REQUIRED: Prepare a schedule to allocate the fair value/book value differentials to Sof’s net assets.