Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 36

On January 1, 2010, Picante Corporation acquired 100 percent of the outstanding voting stock of Salsa Corporation for $1,765,000 cash.On the acquisition date, Salsa had the following balance sheet:
At the acquisition date, the following allocation was prepared:
Although at acquisition date Picante had expected $44,000 in future benefits from Salsa's in-process research and development project, by the end of 2010, it was apparent that the research project was a failure with no future economic benefits.
On December 31, 2011, Picante and Salsa submitted the following trial balances for consolidation:
a.Show how Picante derived its December 31, 2011, Investment in Salsa account balance.
b.Prepare a consolidated worksheet for Picante and Salsa as of December 31, 2011.