On January 1, 2021, Knight Corporation purchases all the outstanding shares of Craig Company for $950,000. It has been decided that Craig Company will use push-down accounting principles to account...

On January 1, 2021, Knight Corporation purchases all the outstanding shares of Craig Company for $950,000. It has been decided that Craig Company will use push-down accounting principles to account for this transaction. The current balance sheet is stated at historical cost. The following balance sheet is prepared for Craig Company on January 1, 2021: Knight Corporation receives the following appraisals for Craig Company’s assets and liabilities: Cash…………………………………………..$ 80,000 Accounts receivable……………………………260,000 Prepaid expenses……………………………….20,000 Land…………………………………………..250,000 Building (net)…………………………………700,000 Current liabilities………………………………90,000 Bonds payable………………………………..280,000 Deferred tax liability…………………………..40,000 1. Record the investment. 2. Prepare the value analysis schedule and the determination and distribution of excess schedule. 3. Record the adjustments on the books of Craig Company. 4. Prepare the entries that would be made on the consolidated worksheet to eliminate the investment. View Solution:

On January 1 2021 Knight Corporation purchases all the outstanding