Pederson Company acquires the net assets of Shelby Company by issuing 100,000 of its $1 par value shares of common stock. The shares have a fair value of $20 each. Just prior to the acquisition, Shelby€™s balance sheet is as follows:

Fair values agree with book values except for the building, which is appraised at $450,000.
The following additional information is available:
€¢ The equipment will be sold for an estimated price of $200,000. A 10% commission will be paid to a broker.
€¢ A major R&D project is underway. The accumulated costs are $56,000, and the estimated value of the work is $90,000.
€¢ A warranty attaches to products sold in the past. The estimated future repair costs under the warranty are $40,000.
€¢ Shelby has a customer list that has value. It is estimated that the list will provide additional income of $100,000 for three years. An intangible asset such as this is valued at a 20% rate of return.
Record the acquisition of Shelby Company on the books of Pederson Company. Provide calculations where needed.

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Shelby Company Balance Sheet January 1, 2011 Assets Liabilities and Equity Accounts receivable... Inventory 80,000 200,000 $280,000 210,000 Bonds payable 100,000 Stockholders' equity: 200,000 Common stock ($1 par) 300,000 Retaied earnings... $910,000 Toa lailiies and equity Equipment (net Land 10,000 620,000 630 Building (net. ,000 $910,000 Total assets