Chapter 3 3-27 On January 1, 2017, Prestige Corporation acquired 100 percent of the voting stock of Stylene Corporation in exchange for $2.030.000 in cash and securities. On the acquisition date, Stylene had the following balance sheet: Cash Accounts receivable Inventory Equipment (net) Trademarks $1,050,000 Accounts payable 23,000 97,000 140,000 1,490,000 850,000 Retained carnings $2,600,000 800,000 750,000 $2,600,000 Common stock At the acquisition date, the book values of Stylene's assets and liabilities were generally equivalent to their fair values except for the following assets: Remaining Useful Life 8 years 4 years Indefinite Fair Value $1,610,000 Book Value Asset Equipment Customer lists $1,490,000 -0- 850,000 160,000 900,000 Trademarks During the next two years, Stylene has the following income and dividends in its own separately prepared financial reports to its parent. Dividends Net Income $25,000 45,000 $175,000 375,000 2017 2018 Dividends are declared and paid in the same period. The December 31, 2018, separate financial statements for each company appear below. Parentheses indicate credit balances. Income Statement 17 Prestige $(4,200,000) 2,300,000 495,000 105,000 (320.000) $ (1,620,000) Stylene $ (2,200,000) 1,550,000 275,000 -0 Revenues Cost of goods sold Depreciation expense Amortization expense Equity earnings in Stylene Net income Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Balance Sheet Cash -0- $ (375,000) $ (2,900,000) (1,620,000) 150,000 $(4,370,000) $ (900,000) (375,000) 45,000 $(1,230,000) $ 430,000 693,000 35,000 75,000 420,000 -0- Accounts receivable Inventory Investment in Stylene Equipment Customer lists Trademarks Goodwill Total assets Accounts payable Common stock Retained earnings 12/31 Total liabilities and equity 890,000 2,400,000 6,000,000 115,000 2,500,000 1,400,000 -0- 850,000 -0- 172,000 $ 13,200,000 S (330,000) (8,500,000) (4,370,000) $(13,200,000) $2,780,000 S (750,000) (800,000) (1,230,000) $(2,780,000) 1) Compute the consolidated balance for the following accounts a. R.E b. Dividend Equipment d. Trademark . Depreciation Expense f. Net Income e. g. Common Stock