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On January 1, 2012, Pierson Corporation exchanged $1,710,000 cash for 90 percent of the outstanding voting stock of Steele Company. The consideration transferred by Pierson provided a reasonable basis for assessing the total January 1, 2012, fair value of Steele Company.At the acquisition date, Steele reported the following owners’ equity amounts in its balance sheet:

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Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,000Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . .60,000Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .265,000In determining its acquisition offer, Pierson noted that the values for Steele’s recorded assets and liabilities approximated their fair values. Pierson also observed that Steele had developed internally a customer base with an assessed fair value of $800,000 that was not reflected on Steele’s books. Pierson expected both cost and revenue synergies from the combination. At the acquisition date, Pierson prepared the following fair-value allocation schedule:Fair value of Steele Company . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,900,000Book value of Steele Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725,000Excess fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175,000 to customer base (10-year remaining life) . . . . . . . . . . . . . . . . . . . . 800,000 to goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 375,000At December 31, 2013, the two companies report the following balances:a. Determine the consolidated balances for this business combination as of December 31, 2013.b. If instead the noncontrolling interest’s acquisition-date fair value is assessed at $152,500, what changes would be evident in the consolidated statements? Get Accounting Help Today