Use the following information for problems 1-4. On January 1, 2012, Adams acquires 100% of Baker in a transaction accounted for using the acquisition method. Adams will use equity accounting for its investment in Baker. Baker will remain a wholly owned subsidiary of Adams. The following is information about this acquisition. To pay for this purchase, Adams issues 20,000 shares of common stock with a $5 par and $20 market value. Legal and accounting costs were $50,000- Stock issuance costs were $20,000. If Baker has net income of $50,000 in 2012, Adams will pay an additional $100,000. At acquisition date there is a 40% probability of this occurring. The book value of net assets acquired of Baker was $200,000 at acquisition date. Adams was willing to pay in excess of book value to acquire Baker because Baker had a building (10 year life) with a book value of $300,000 and a fair value of $340,000. Baker has $40,000 in net income in 2012 and pays a dividend of $30,000. Adams has $100,000 of net income in 2012 and pays a dividend of $20,000. 1. Prepare an investment analysis at date of acquisition, including the following: Calculate the amount debited to the investment Calculate the premium over book value Determine the amount of goodwill or if it is a bargain purchase. How much is the excess depreciation that will be reected as consolidation entry E in 2012 ? an we