PROBLEM $1$

Avery Company acquired the net assets of Iowa Company on June $1,20$X$1.$ The net assets acquired

include plant assets that are provisionally estimated to have a fair value of $$840,000$ with a $10-$year usable

life and no salvage value. The equipment was provisionally estimated to have a fair value of $$480,000$

with a $20-$year usable life and no salvage value. Depreciation is recorded based on months in service for

both the plant assets and equipment. The remaining unallocated amount of the price paid is $$50,000,$

which is recorded as goodwill.

At the end of $20$X$1,$ Avery prepared the following statements $($includes Iowa Company for the last six

months$)$:

Balance Sheet

Summary Income Statement

In March $20$X$2,$ the final estimated fair value of the acquired plant assets is $$720,000$ with no change

in the estimate of useful life or salvage value. Also, the final estimated fair value of the acquired equipment is

$$540,000$ with no change in the estimate of useful life or salvage value.

Prepare any journal entries required in March $20x2.$

Prepare the revised balance sheet and income statement for $20x1$ that will be included in the $20x2$

comparative statements.