Company P Book Value of Net Assets

Company P Book Value of Net Assets

On January 1, 2014, Company P acquired 80% of Company S for $570,000 when the book value of net assets was $600,000. This excess of implied value over book value was allocated to equipment $50,000 with a 10-year life and goodwill $62,500. On January 2, 2015, Company P issued $120,000 of 8% bonds at face value to help finance the purchase of 25% of the outstanding common stock of Alpha Company for $200,000. No excess resulted from this transaction. Alpha earned $100,000 net income during 2015 and paid $20,000 in dividends. The only change in plant assets during 2015 was that Company S sold a machine for $10,000. The machine had a cost of $60,000 and accumulated depreciation of $40,000. Depreciation expense recorded during 2015 was as follows:

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