Moon Company is contemplating the acquisition of Yount, Inc., on January 1, 2011. If Moon acquires Yount, it will pay $730,000 in cash to Yount and acquisition costs of $20,000.
The January 1, 2011, balance sheet of Yount, Inc., is anticipated to be as follows:

Fair values agree with book values except for the inventory and the depreciable fixed assets which have fair values of $70,000 and $400,000, respectively.
Your projections of the combined operations for 2011 are as follows:
Combined sales............................. $200,000
Combined cost of goods sold, including Yount€™s beginning inventory, at book value,
which will be sold in 2011 ........................ 120,000
Other expenses not including depreciation of Yount assets........... 25,000
Depreciation on Yount fixed assets is straight-line using a 20-year life with no salvage value.
Required
1. Prepare a value analysis for the acquisition and record the acquisition.
2. Prepare a pro forma income statement for the combined firm for 2011. Show supporting calculations for consolidated income. Ignore tax issues.

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Yount, Inc. Pro Forma Balance Sheet January1, 2011 Assets abilities and Equi $ 30,000 165,000 80,000 115,000 $100,000 Crent liabilities Cash equivalents Accounts receivable Inventory Depreciable fixed assets Accumulated depreciation 120,000 Long-term liabilities 50,000 Common stock ($10 par 200,000 Retained earnings (80,000! Total assets.... $390,000 Total liabi'ies and equity $390,000