Victory Corporation had the following selected account balances and fair values at December 31, 2016, when it was acquired by Danner Company.

	Book Values	Fair Values
Receivables	$ 30,000.00	$ 30,000.00
Customer Relationships	$ 15,000.00	$100,000.00
Patents	$ -	$250,000.00
In-process R&D	$ -	$100,000.00
Liabilities	$ 90,000.00	$ 90,000.00
Common Stock	$ 40,000.00
Additional paid-in capital	$ 90,000.00

Danner Company acquired all of the common shares of Victory Corporation by issuing 6,000 shares of its own common stock valued at $80 per share. Danner incurred stock issuance costs of $3,500 and paid $19,500 in direct clerical and legal costs of the combination. Danner also agreed to pay an additional $20,000 if Victory achieved certain profit goals within the first three years. The contingent payment was determined to have a fair value of $8,000.

Required:

1. What is the acquisition cost of the combination?

2. How do the stock issuance costs affect Danner's balance sheet?

3. How do the direct costs of the combination affect Danner's balance sheet?

4. Without performing computations, how will Victory's revenues and expenses for 2016 affect the consolidated totals?

5. What will be the accounting treatment of the In-process R & D?