Avery Company acquired the net assets of Iowa Company onJune 1, 2020.The net assets acquired include plant assets that are provisionally estimated to have a fair value of $384,000 with a 9-year usable life and a salvage value of $24,000. Also buildings are provisionally estimated to have a fair value of $321,600 with a 10-year usable life and salvage value of $18,000.Depreciation is recorded based on sum of years' (SYD) digit method for plant assets and Double Declining Balance (DDB) method for buildings. Assume the plant assets were purchased on June 1, 2018 and buildings were originally acquired on June 1, 2019.Avery recorded gains on acquisition of $73,000.

At the end of December 2020, Avery prepared the following statements (includes Iowa Company for the last seven months):

Balance Sheet

Accounts Receivable.................. $100,000

Current liabilities................... .$ 170,000

Inventory..............................120,000

Bonds payable......................450,000

Equipment (net).....................200,000

Common stock ($1 par)...........80,000

Plant assets (net).....................1,200,000

Paid-in Capital in excess of par.....1,100,000

Buildings870,000

Retained earnings..................690,000

Total assets.................$2,490,000

Total liabilities and equity........$2,490,000

Summary Income Statement

Sales revenue..............................................................

$780,000

Cost of goods sold........................................................

510,000

Gross profit..................................................................

Operating expenses......................................................... $240,000

$270,000

Depreciation expense.......................................................145,000

(385,000)

Gains on Acquisition.......................................................

73,000

Net Income/(Net Loss).............................................

$(42,000)

In March 2021, the final estimated fair value of the acquired plant assets is $450,000 with a salvage value of $22,500 but with no change in the estimated useful life.The final estimated fair value of the acquired buildings is $198,000 with a salvage value of $36,000 but with no change in theestimated useful life.

1.Prepare any journal entries required in March 2021.

2.Prepare the revised balance sheet and income statement for 2020 that will be included in the 2021 comparative statements.