.'Il Verizon 7:40 AM * 100%- CHAPTER 3 HOMEWORKp ADVANCED ACCOUNTING CHAPTER 3 HOMEWORK FEBRUARY 13, 2018 On January 1, 2017, Pinnacle Corporation exchanged $3.200,000 cash for 100 percent of the outstanding voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet: S 122,000 Accounts payable S 375,000 Accounts receivable 283,000 Long-term debt 2,655,000 350,000 Common stock 1500,000 875,000 Retained earnings 1,100,000 Buildings (net) $5,630,000 $5,630,000 Pinnacle prepared the following fair-value allocation Fair value of Strata (consideration transferred) Carrying amount acquired Excess fair value $3.200,000 S 600,000 to licensing agreements (overvalued) 00,000 200,000 to buildings (undervalued) $ 300.000 to goodwill (indefinite life) S 400,000 At the acquisition date, Strata's buildings had a 10-year remaining life and its licensing agreements were due to expire in 5 years. At December 31, 2018, Strata's accounts payable included an $85,000 current iability owed to Pinnacle. Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial value method in its internal accounting for its investment in Strata Courses Calendar To Do Notifications Inbox