Problem$2-1($LO$3,4,5,6)100\%$purchase,goodwill,consolidatedbalancesheet. On July $1,2016,$ Roland Company exchanged $18,000$ of its $$45$ fair value $($$$1$ par value$)$ shares for all the outstanding shares of Downes Company. Roland paid acquisition costs of $$40,000.$ The two companies had the following balance sheets on July $1,2016$:

Assets

Othercurrentassets................ Inventory $........................$ Land............................ Building$($net$).....................$ Equipment$($net$)...................$

Totalassets..................... Liabilities and Equity

Currentliabilities.................. Commonstock$($$$1$par$).............$ Paid$-$incapitalinexcessofpar $.......$ Retainedearnings $.................$

Totalliabilitiesandequity $.........$

$

Roland

$50,000120,000100,000300,000430,000$

Downes

$ $70,00060,00040,000120,000110,000$

$$400,000$

$ $60,00020,000180,000140,000$

$$400,000$

$$1,000,000$

$ $180,00040,000360,000420,000$

$$1,000,000$

The following fair values applied to Downes$$s assets:

Othercurrentassets........... Inventory $...................$ Land....................... Building.................... Equipment $..................$

$ $70,00080,00090,000150,000100,000$

Required

Required

$1.$ Record the investment in Downes Company and any other entry necessitated by the purchase. $2.$ Preparethevalueanalysisandthedeterminationanddistributionofexcessschedule. $3.$ Prepare a consolidated balance sheet for July $1,2016,$ immediately subsequent to the

purchase.