2. P Corporation paid $420,000 for 70% of S Corporation’s $10 par common stock on December 31, 2011, when S Corporation’s stockholders’ equity was made up of $300,000 of Common Stock, $90,000 of Other Contributed Capital and $60,000 of Retained Earnings. S’s identifiable assets and liabilities reflected their fair values on December 31, 2011, except for S’s inventory which was undervalued by $60,000 and their land which was undervalued by $25,000. Balance sheets for P and S immediately after the business combination are presented in the partially completed work-paper below.
ASSETS
Cash
Accounts
receivable-net
Inventories
Land
Plant assets-
net
Investment in
S Corp.
Difference between implied and book value
Goodwill
Total Assets
EQUITIES
Current
liabilities
Capital stock
Additional paid-in capital
Retained earnings
Noncontrolling interest
Total Equities
Required:

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