The following are several account balances taken from the records of Karson and Reilly as of December 31, 2021. A few asset accounts have been omitted here. All revenues, expenses, and dividend declarations occurred evenly throughout the year. Annual tests have indicated no goodwill impairment.

On July 1, 2021, Karson acquired 80 percent of Reilly for $1,330,000 cash consideration. In addition, Karson agreed to pay additional cash to the former owners of Reilly if certain performance measures are achieved after three years. Karson assessed a $30,000 fair value for the contingent performance obligation as of the acquisition date and as of December 31, 2021.

On July 1, 2021, Reilly’s assets and liabilities had book values equal to their fair value except for some trademarks (with five-year remaining lives) that were undervalued by $150,000. Karson estimated Reilly’s total fair value at $1,700,000 on July 1, 2021.

For the following items, what balances would be reported on Karson’s December 31, 2021, consolidated financial statements?

Sales                                               Consolidated Net Income

Expenses                                       Retained Earnings, 1/1

Noncontrolling Interest in          Trademarks

Subsidiary’s Net Income             Goodwill    

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Karson Relly $ (800,000) $(500,000) 280,000 Sales Cost of goods sold Operating expenses Investment income 400,000 200,000 not given (1,400,000) 80,000 100,000 -0- (700,000) 20,000 Retained earnings, 1/1 Dividends declared Trademarks. 600,000 200,000 Royalty agreements. Licensing agreements. 300,000 400,000 (200,000) (100,000) (600,000) 700,000 400,000 (500,000) (400,000) (500,000) Liabilities... Common stock ($10 par value) Additional paid-in capital