Question & Answer: On January 1, 2017, Pinnacle Corporation exchanged $3,347,500 cash for 100 percent of the outstanding voting stock of Strata Corporation. On the acquisitio…..

On January 1, 2017, Pinnacle Corporation exchanged $3,347,500 cash for 100 percent of the outstanding voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet: Cash Accounts receivable Inventory Buildings (net) Licensing agreements $146,000 Accounts payable 374,000 397,000 2,045,000 3,225,000 $6,187,000 $422,000 3,085,000 1,500,000 1,180,000 Long-term debt Common stock Retained earnings $6,187,000 Pinnacle prepared the following fair-value allocation Fair value of Strata (consideration transferred) Carrying amount acquired Excess fair value 3,347,500 2,680,000 $667,500 to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) $352,000 (124,000)228,000 $439,500