PROBLEM 1: Assume that the company to be acquired by Michael, Inc. has the following balance sheet on the December 31, 2011 acquisition date: Johnson Company Balance Sheet December 31, 2011 Cash P40,000 Marketable Investments 60,000 Inventory 100,000 Land 30,000 Building (Net) 150,000 Equipment (Net) 80,000 TOTAL ASSETS 460,000 Current Liabilities 25,000 5%, 5-yr bond payable 100,000 Common Stock, P1 par 10,000 Paid in capital in excess of par 140,000 Retained Earnings TOTAL LIAB. & EQUITY 185,000 460,000 Note: A customer list with a significant value exist and there is an unrecorded warranty liability on prior product sales. Fair values for all accounts have been established as of December 31, 2011, in conformity with the fair value measurement as follows: