Reference no: EM132893594

On January 1, 2021 Amelias Corporation acquired 100% of the outstanding voting stock of Julias Company in exchange for $726,000 cash. At that time, although Julias book value was $560,000, Amelias assessed Julias total business fair value at $726,000.

• The book values of Julias individual assets and liabilities approximated their acquisition-date fair values except for the equipment account which was undervalued by $100,000. The undervalued equipment had a 5-year remaining life at the acquisition date. Any remaining excess fair value was attributed to goodwill.

Problem 1: 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.

Problem 2: Assuming that Amelias accounts for its investment in Julias using the equity method, prepare the worksheet entries needed on the date of acquisition.

Problem 3: Finally, prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2021.