On January 1 2015 Pruitt Company issued 25500 shares of its

On January 1, 2015, Pruitt Company issued 25,500 shares of its common stock in exchange for 85% of the outstanding common stock of Shah Company. Pruitt’s common stock had a fair value of $28 per share at that time (par value of $2 per share). Pruitt Company uses the cost method to account for its investment in Shah Company and files a consolidated income tax return. A schedule of the Shah Company assets acquired and liabilities assumed at book values (which are equal to their tax bases) and fair values follows.

Additional Information:

Pruitt uses the straight-line method for all depreciation and amortization purposes.

Part A) Prepare the stock acquisition entry on Pruitt Company’s books. (If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Part B) Prepare the elimination entries for a consolidatd statements workpaper on January 1, 2005, immediately after acquisition.

Item	Book Value/ Tax Basis	Fair Value	Excess
Receivables (net)	$125,000	$125,000	$ —0—
Inventory	167,000	195,000	28,000
Land	86,500	120,000	33,500
Plant assets (net)	467,000	567,000	100,000
Patents	95,000	200,000	105,000
Total	$940,500	$1,207,000	$266,500

Current liabilities	$89,500	$89,500	$—0—
Bonds payable	300,000	360,000	60,000
Common stock	120,000
Other contributed capital	164,000
Retained earnings	267,000
Total	$940,500

PRUITT COMPANY

Net assets at book value (940,500 - 389,500)	551000
Excess of fair value (266,500 - 60,000)	206500
Total value of the company	757500
85% interest acquired	643875
Price paid (25,500 * 28)	714000
Goodwill (714,000 - 643,875)	70125
Non controlling interest (757,500 - 643,875)	113625

On January 1 2015 Pruitt Company issued 25500 shares of its

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