Peach Company acquired all of Star Inc's outstanding shares on January 1. Peach paid $300,000 and issued $200,000 in long-term liabilities and paid $40,000 in legal fees. Peach also agreed to pay $75,000 to the former owners of Star contingent on meeting certain revenue goals during the following year. Peach estimated the present value of its probability-adjusted expected payment for the contingency or contingent obligation at $43,000.
Precombination book values for Star, Inc are as follows:
Current Assets: $85,000
Equipment: $90,000
Buildings: $175,000
Goodwill: $30,000
Total: $380,000
Current Liabilities: ($50,000)
Common Stock: ($180,000)
Retained Earnings: ($115,000)
Revenues: ($135,000)
Expenses: $100,000
Total: $380,000
Peach's appraisal of Star found two balance sheet accounts that differed from fair value. Equipment was undervalued by $15,000 and Building by $5,000. Peach noted that Star has an unrecorded client contract worth $60,000 and research and development activity in process with an appraised fair value of $90,000.
a. What is the total consideration given by Peach?
b. What values for each of the acquired assets and liabilities will be used in the consolidation?