Pine Corp. acquired all 100% of Stone Company outstanding common shares in exchange for $500,000 in cash and 100,000 of its common shares ($1 par value, $23 fair value) on 3/15/21. The acquisition is considered a statutory merger and Stone Company will be dissolved.

On the date of acquisition Stone Company reported the following balance sheet:

Stone Company

Balance Sheet

March 15, 2021

Assets

Cash............................................................................................ 245,000

Accounts receivable...................................................... 136,000

Allowance for doubtful accounts............................. -12,000 124,000

Inventory.................................................................................... 338,000

Current assets............................................................................. $707,000

Depreciable fixed assets............................................................. $850,000

Less accumulated depreciation.................................................. 131,000 719,000

Patent.......................................................................................... 122,000

Goodwill.................................................................................... 75,000

Total assets................................................................................. $1,623,000

Liabilities and Stockholders Equity

Accounts payable ...................................................................... 195,000

Income taxes payable................................................................. 56,000

Accrued expenses....................................................................... 89,000

Current liabilities....................................................................... $340,000

Long-term debt.................................................................... 800,000

Shareholders equity:

Common stock ($1 par)....................................................... $90,000

Additional paid-in capital in excess of par value................. 137,000

Retained earnings................................................................. 256,000 483,000

Total liabilities and shareholders equity................................... $1,623,000

Required: create the purchase price allocation for the acquisition (note this is more than determining the AAP). determine whether, as of the acquisition date, the following assets acquired and liabilities assumed have estimated fair values in excess of their respective carrying values:

Carrying Value Fair Value

Inventory $ 338,000 $350,000

Deprec. Fixed Assets (10-year life) 719,000 900,000

In-Process R&D -0- 300,000

Customer list (4 year life) -0- 200,000

Long-term debt 800,000 825,000

and provide a schedule that allocates the purchase price to assets acquired and liabilities assumed along with any goodwill that should be recognized