Petra Corporation Paid $500,000 for 80% of the Outstanding Voting

Essay

Petra Corporation paid $500,000 for 80% of the outstanding voting common stock of Sizable Corporation on January 2, 2014 when the book value of Sizable's net assets was $460,000. The fair values of Sizable's identifiable net assets were equal to their book values except as indicated below.
Sizable reported net income of $75,000 during 2014; dividends of $35,000 were declared and paid during the year.
Required:
1. Prepare a schedule to allocate the fair value/book value differential to the specific identifiable assets and liabilities.
2. Determine Petra's income from Sizable for 2014.
3. Determine the correct balance in the Investment in Sizable account as of December 31, 2014.