Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 45

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:

In 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:

At 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