On January 1, 2019 Roberts Corporation acquired 100% of the outstanding voting stock of Williams Company in exchange for $726,000 cash. At that time, although Williams book value was $560,000, Roberts assessed Williams total business fair value at $726,000.

The book values of Williams individual assets and liabilities approximated their acquisition-date fair values except for the equipment account which was undervalued by $350,000. The undervalued equipment had a 5-year remaining life at the acquisition date. Any remaining excess fair value was attributed to goodwill.

Post-acquisition financial information for both companies on January 1, 2019 is shown below:

	Roberts	Williams
Cash	$177,000	$90,000
Accounts receivable	356,000	120,000
Inventory	440,000	220,000
Investment in Williams Stock	726,000	-0-
Land	180,000	200,000
Buildings and equipment (net)	496,000	320,000
Total assets	$2,375,000	$950,000
Accounts payable	$(120,000)	$(70,000)
Notes payable	(360,000)	(320,000)
Common stock	(610,000)	(150,000)
Additional paid-in capital	(200,000)	(90,000)
Retained earnings, 1/1/19	(1,085,000)	(320,000)
Total liabilities and stockholders’ equity	$2,375,000	$950,000

Required:

• Using the acquisition method, determine the allocation of the purchase price to the specific asset and liability accounts as of the date of acquisition. Round all calculations to the nearest whole dollar.
• Assuming that Roberts accounts for its investment in Williams using the equity method, prepare the worksheet entries needed on the date of acquisition.
• Finally, prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2019.

Answer rating: 100% (QA)

Since the book values of Williams individual assets and liabilities approximated their acquisitionda... View the full answer