5. During December 2018, SCORE sold inventory to PORE for $60,000, the cost of the inventory to SCORE was $30,000. 10% of these goods remained in POREs inventory at the end of 2018. PORE eventually sold the entire inventory to an outside customer in 2019.

6. A goodwill impairment test conducted during December of 2017 revealed a loss of $50,000 and Dec of 2019 another loss of 35,000

REQUIRED:

1. Prepare a schedule showing the calculation of goodwill at the date of acquisition of SCORE under the fair value enterprise method, and an acquisition differential amortization schedule.

Consolidation Project Solve the consolidation problem. You can use MS Word or MS Excel to complete the project. No handwritten please. Retained Earnings Statements Balance, Jan 1, 2019 Net Income Less: Dividends $1,020,000 $400,000 ($260,000) $1,160,000 $760,000 $140,000 ($100,000) Retained Earnings Balance Sheets $800,000 On Jan 1, 2016, PORE Inc. purchased 80% of the voting shares of SCORE Inc. for $900,000 cash, plus a commitment to pay an additional $300,000 in three years if sales grow by more than 20% over the next three years. An independent business valuator stated that PORE Inc. could have paid an extra $100,000 at the date of acquisition instead of agreeing to a potential payment of $300,000 in three years PORE Inc. SCORE Inc. Cash Accounts Receivable Inventory Investment in SCORE Inc. Land Equipment (net) $300,000 300,000 250,000 900,000 80,000 220,000 $240,000 395.000 175,000 70,000 210,000 On the date of acquisition, SCORE's Common Stock and Retained Earnings were valued at $200,000 and $600,000 respectively. PORE uses the cost method to account for its investment. SCORE's fair values approximated its carrying values with the following exception: The equipment had a fair value that was $ 100,000 higher than its carrying value, and was estimated to have a remaining useful life of 10 years from the date of acquisition with no salvage value. SCORE's inventory had a fair value that was $2,000 more than book value. SCORE sold this inventory in 2016. SCORE had an internally developed patent that had a fair value of $20,000 and can be used for four years. SCORE did not include the value of the patent on its financial records. Both companies use straight line amortization exclusively for all assets and liabilities if applicable. The effective tax rate for both companies is 40%. Total Assets $2,050,000 $1,090,000 $90,000 Current Liabilities Bonds Payable Common Shares Retained Earnings $270,000 220,000 400,000 1,160,000 200,000 800,000 Total Liabilities and Equity $2,050,000 $1,090,000 The Financial Statements of PORE & SCORE for the Year ended December 31, 2019 are shown below: Other Information: Income Statements PORE Inc. SCORE Inc. Sales Other Revenues $1,110,000 $400,000 $530,000 $160,000 1. On Jan 2, 2016. SCORE purchased equipment for $70,000 and estimated its useful life would be 7 years with no salvage value. On Jan 1, 2019, SCORE sold the equipment to PORE for $80,000. Both companies use straight line depreciation. 2. During 2018. PORE sold a parcel of land to SCORE for $95,000. PORE had purchased this land in 2016 for $80,000. Score still has the land and uses as a warehouse space. 3. During 2019, PORE charged SCORE $15,000 of management fees. SCORE paid $10,000 during the year and expects to pay the remaining $5,000 in 2020. Less: Expenses: Cost of Goods Sold: Depreciation Expense Other Expenses Income Tax Expense $800,000 $30,000 $110,000 $170,000 $330,000 $20,000 $150,000 $50,000 4. During December 2019, PORE sold inventory to SCORE for $80,000, the cost of the inventory to PORE was $60,000. 40% of these goods remained in SCORE's inventory at the end of 2019. Net Income $400,000 $140,000 Consolidation Project Solve the consolidation problem. You can use MS Word or MS Excel to complete the project. No handwritten please. Retained Earnings Statements Balance, Jan 1, 2019 Net Income Less: Dividends $1,020,000 $400,000 ($260,000) $1,160,000 $760,000 $140,000 ($100,000) Retained Earnings Balance Sheets $800,000 On Jan 1, 2016, PORE Inc. purchased 80% of the voting shares of SCORE Inc. for $900,000 cash, plus a commitment to pay an additional $300,000 in three years if sales grow by more than 20% over the next three years. An independent business valuator stated that PORE Inc. could have paid an extra $100,000 at the date of acquisition instead of agreeing to a potential payment of $300,000 in three years PORE Inc. SCORE Inc. Cash Accounts Receivable Inventory Investment in SCORE Inc. Land Equipment (net) $300,000 300,000 250,000 900,000 80,000 220,000 $240,000 395.000 175,000 70,000 210,000 On the date of acquisition, SCORE's Common Stock and Retained Earnings were valued at $200,000 and $600,000 respectively. PORE uses the cost method to account for its investment. SCORE's fair values approximated its carrying values with the following exception: The equipment had a fair value that was $ 100,000 higher than its carrying value, and was estimated to have a remaining useful life of 10 years from the date of acquisition with no salvage value. SCORE's inventory had a fair value that was $2,000 more than book value. SCORE sold this inventory in 2016. SCORE had an internally developed patent that had a fair value of $20,000 and can be used for four years. SCORE did not include the value of the patent on its financial records. Both companies use straight line amortization exclusively for all assets and liabilities if applicable. The effective tax rate for both companies is 40%. Total Assets $2,050,000 $1,090,000 $90,000 Current Liabilities Bonds Payable Common Shares Retained Earnings $270,000 220,000 400,000 1,160,000 200,000 800,000 Total Liabilities and Equity $2,050,000 $1,090,000 The Financial Statements of PORE & SCORE for the Year ended December 31, 2019 are shown below: Other Information: Income Statements PORE Inc. SCORE Inc. Sales Other Revenues $1,110,000 $400,000 $530,000 $160,000 1. On Jan 2, 2016. SCORE purchased equipment for $70,000 and estimated its useful life would be 7 years with no salvage value. On Jan 1, 2019, SCORE sold the equipment to PORE for $80,000. Both companies use straight line depreciation. 2. During 2018. PORE sold a parcel of land to SCORE for $95,000. PORE had purchased this land in 2016 for $80,000. Score still has the land and uses as a warehouse space. 3. During 2019, PORE charged SCORE $15,000 of management fees. SCORE paid $10,000 during the year and expects to pay the remaining $5,000 in 2020. Less: Expenses: Cost of Goods Sold: Depreciation Expense Other Expenses Income Tax Expense $800,000 $30,000 $110,000 $170,000 $330,000 $20,000 $150,000 $50,000 4. During December 2019, PORE sold inventory to SCORE for $80,000, the cost of the inventory to PORE was $60,000. 40% of these goods remained in SCORE's inventory at the end of 2019. Net Income $400,000 $140,000