Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016.

Question:

Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016. Adams paid a total of $603,000 in cash for these shares. The 10 percent non-controlling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2016, Barstow had the following account balances:

________________________________________ Book Value ___________ Fair Value

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $160,000 . . . . . . . . . . . . . . $160,000

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 . . . . . . . . . . . . . . . . 150,000

Buildings (10-year remaining life) . . . . . . . . . . . . . . . . 220,000 . . . . . . . . . . . . . . . . 200,000

Equipment (5-year remaining life) . . . . . . . . . . . . . . . .160,000 . . . . . . . . . . . . . . . . 200,000

Patents (10-year remaining life) . . . . . . . . . . . . . . . . . . . -0- . . . . . . . . . . . . . . . . . . 50,000

Notes payable (due in 5 years) . . . . . . . . . . . . . . . . .(200,000) . . . . . . . . . . . . . (180,000)

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (180,000)

Retained earnings, 12/31/16 . . . . . . . . . . . . . . . . . . .(280,000)

December 31, 2018, adjusted trial balances for the two companies follow:

Adams Corporation acquired 90 percent of the outstanding voting shares

At year-end, there were no intra-entity receivables or payables.
a. Prepare schedules for acquisition-date fair-value allocations and amortizations for Adams's investment in Barstow.
b. Determine Adams's method of accounting for its investment in Barstow. Support your answer with a numerical explanation.
c. Without using a worksheet or consolidation entries, determine the balances to be reported as of December 31, 2018, for this business combination.
d. To verify the figures determined in requirement (c), prepare a consolidation worksheet for Adams Corporation and Barstow, Inc., as of December 31, 2018.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...