Purchase of shares directly from subsidiary. Prior to January 2, 2018, Prestar and Saturn are separate corporations. Saturn Corporation is contemplating a major expansion and seeks to be purchased by...

Purchase of shares directly from subsidiary. Prior to January 2, 2018, Prestar and Saturn are separate corporations. Saturn Corporation is contemplating a major expansion and seeks to be purchased by a larger corporation with available cash. Prestar Corporation issues $1,350,000 of bonds and uses the proceeds to buy 30,000 newly issued Saturn shares for $45 per share. The price reflects a control premium since the fair value of the NCI shares is $40. Just prior to the issue of the bonds and the issue and purchase of Saturn stock, Prestar and Saturn have the following separate balance sheets:

Purchasing the 30,000 new shares gives Prestar Corporation a 60% controlling interest (30,000 of a total 50,000 common shares). On the purchase date, Saturn’s property is undervalued by $200,000 and has a remaining life of 20 years. Any remaining excess cost can be attributed only to goodwill.

Prepare a determination and distribution of excess schedule for Prestar Corporation’s investment in Saturn. Prepare a consolidated balance sheet for the consolidated firm immediately after the acquisition by Prestar Corporation.