PROBLEMS Problem 2-1 (LO 3, 4, 5, 6) 100% purchase, goodwill, consolidated balance sheet. 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 Roland Downes Other current assets. 50,000 $ 70,000 Inventory 120,000 60,000 Land 100,000 40,000 Building (net) 300,000 120,000 Equipment (net) 430,000 110,000 Total assets.. $1,000,000 $400,000 $ Liabilities and Equity Current liabilities Common stock ($1 par) Paid in capital in excess of par Retained earnings Total liabilities and equity $ 180,000 40,000 360,000 420,000 $1,000,000 $ 60,000 20,000 180,000 140,000 $400,000 The following fair values applied to Downes's assets: Other current assets $ 70,000 Inventory 80,000 Land 90,000 Building 150,000 Equipment. 100,000 1. Record the investment in Downes Company and any other entry necessitated by the purchase. 2. Prepare the value analysis and the determination and distribution of excess schedule. 3. Prepare a consolidated balance sheet for July 1, 2016, immediately subsequent to the purchase. Required PROBLEMS Problem 2-1 (LO 3, 4, 5, 6) 100% purchase, goodwill, consolidated balance sheet. 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 Roland Downes Other current assets. 50,000 $ 70,000 Inventory 120,000 60,000 Land 100,000 40,000 Building (net) 300,000 120,000 Equipment (net) 430,000 110,000 Total assets.. $1,000,000 $400,000 $ Liabilities and Equity Current liabilities Common stock ($1 par) Paid in capital in excess of par Retained earnings Total liabilities and equity $ 180,000 40,000 360,000 420,000 $1,000,000 $ 60,000 20,000 180,000 140,000 $400,000 The following fair values applied to Downes's assets: Other current assets $ 70,000 Inventory 80,000 Land 90,000 Building 150,000 Equipment. 100,000 1. Record the investment in Downes Company and any other entry necessitated by the purchase. 2. Prepare the value analysis and the determination and distribution of excess schedule. 3. Prepare a consolidated balance sheet for July 1, 2016, immediately subsequent to the purchase. Required