Alpha Corporation purchased 70 % of Beta Company on January 1, 2015, for $98,000

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Alpha Corporation purchased 70 % of Beta Company on January 1, 2015, for $98,000. On that date, the non-controlling interest had a fair value of $42,000 and Beta reported common stock outstanding of $100,000 and retained earnings of $20,000. The differential is partially comprised of $5,000 related to excess value of buildings and equipment. These assets have a remaining life of five years. During 2015 Beta had income of $40,000 and paid dividends of $10,000. At the time of acquisition Beta had a balance of $50,000 in accumulated depreciation. Alpha uses the equity method in accounting for its ownership of Beta. On December 31, 2016 the trail balances of the companies are as follows.

Income statement                              Alpha Corp.                 Beta Company

Sales                                                    200,000                       120,000

Cost of Goods sold                              -99,800                        -61,000

Depreciation expense                         -25,000                        -17,400

Interest expense                                 -6,0000                        -14,000

Income from subsidiary                      16,620

Consolidation net income                   85,820                         27,600

Statement of retained earnings        

Beginnings balance                             228,560                       50,000

Net income                                         85,820                         27,600

Less Dividends declared                     -40,000                        -10,000

Ending balance                                    274,380                       67,600

Balance sheet

Cash & Accounts receivable               81,400                         39,200

Inventory                                            60,000                         55,000

Investments in Beta                            124,370                      

Land                                                    40,000                         30,000

Buildings & equipment                       504,000                       362,000

Accumulated depreciation                 -168,000                      -77,400

Total assets                                         641,770                       408,800

Accounts payable                                86,190                         41,200

Bonds payable                                    80,000                         200,000

Bond premium                                    1,200                          

Common Stock                                    200,000                       100,000

Retained earnings                               274,380                       67,600

Total liabilities & equity                    641,770                       408,800

Beta sold inventory costing $45,000 to Alpha for $75,000 in 2015. Alpha held $9,000 in inventory at the end of 2015. Beta sold inventory costing $77,000 to Alpha in 2016 for $140,000 Alpha held $10,000 in inventory at the end of 2016.

On 1/1/2015 Alpha sold equipment with a book value of $10,000 to Beta for $14,000. The equipment originally cost Alpha $18,000. The equipment has a remaining life of 5 years at 1/1/2015.

1. Prepare an allocation of acquisition value at the time of acquisition to determine any excess value.
2. Record the equity entries made by Alpha for 2016.
3. Prepare the analysis and entries required for the worksheet in 2016.