pal corporation acquired 40 of the outstanding preferred stock of saltz inc for 60 0 4372604

PAL Corporation acquired 40% of the outstanding preferred stock of Saltz, Inc. for $60,000 and 90% of that firm’s outstanding common stock for $600,000 on January 1, 2010. On the date that the controlling interest was acquired, the stockholders’ equity section of Saltz, Inc. was as follows. Preferred stock—10%, cumulative, fully participating, liquidation value is equal to par value $100,000Common stock—$10 par value…….. 400,000Retained earnings…………. 200,000Total……………. $700,000There were no dividends in arrears on January 1, 2010. For the fiscal year ended December31, 2010, Saltz, Inc. reported net income of $130,000. No cash or stock dividends were declared by the company during 2010.The difference between the implied and book value of the equity interest in the common stock relates to the land owned by Saltz, Inc. Condensed financial information for the two companies at December 31, 2010, is presented below.Required:A. Prepare a schedule to compute the difference between the implied value of the common stock and the book value of Saltz.B. Prepare consolidated statements workpapers for the year ended December 31,2011.
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PAL Corporation acquired 40 of the outstanding preferred stock of

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