Recording purchase with goodwill. Woolco, Inc., purchased all the outstanding stock of Paint, Inc., for $980,000. Woolco also paid $10,000 in direct acquisition costs. Just before the investment, the two companies had the following balance sheets:
Appraisals for the assets of Paint, Inc., indicate that fair values differ from recorded book values for the inventory and for the depreciable fixed assets, which have fair values of $250,000 and $750,000, respectively.
1. Prepare the entries to record the purchase of the Paint, Inc., common stock and payment of acquisition costs.
2. Prepare the value analysis and the determination and distribution of excess schedule for the investment in Paint, Inc.
3. Prepare the elimination entries that would be made on a consolidated worksheet.