1) Parrot Corporation acquired 90% of Swallow Co.

on January 1, 2011 for $27,000 cash when Swallow's

stockholders' equity consisted of $10,000 of Capital Stock and $5,000 of Retained Earnings. The
difference
between the fair value and book value of Swallow's net assets was allocated solely to a patent amortized
over 5 years. The separate company statements for Parrot and Swallow appear in the first two columns of
the partially completed consolidation working papers.