Given Data: On January 1, 2021, Brooks Corporation exchanged $1,183,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,105,000. Chandler's individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $204,000 with an estimated remaining life of six years. The Chandler acquisition was Brook's only business combination for the year. In case expected synergies did not materialize, Brooks Corporation wished to prepare for a potential future spin-off of Chandler, Inc. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2021, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Parenthesis indicate credit balances. BROOKS CORPORATION Chandler, Inc. outstanding voting stock purchased by Broot Fair value consideration paid to Chandler Chandler book value of acquisition date Patented technology account undervalued Estimated remaining life in years Financial Statements December 31, 2021 100% $ 1,183,000 $1,105,000 $ 204,000 6 Brooks Corp. Chandler. Iac. lacone Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity carnings from Chandler Net income $ (640,000) $ (587,000) 255,000 203,000 (126,000) 150,000 151,000 (199,000 $(560,000 $ (233,000). Statement of Retained Earnings Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 $ (1.835,000) $ (805,000) (560,000) (233,000) 100,000 40,000 12.295,000) 1938,000) Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total scoats $ 343,000 $ 432,000 1,468,000 134,000 221,000 395,000 410,000 693,000 341,000 $3,033,000 $1,404,000 Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity $ (203,000) $ (106,000) (535,000) (300,000) (2,295,000 (998,000 13,033,000 11.404,000) Part a. Acquisition-date fair value allocation and annual excess amortization Shoy hoy Brooks determined the following account balances: Gain on Bargain Purchase. Equity Earnings in Chandler, and Investment in Chandler Consideration transferred Chandler book value Technology undervaluation (6 yr.life) Acquisition fair value of net assets Gain on bargain purchase Chandler net income Technology amortization Equity earnings in Chandler Fair value of net assets at acquisition-date Equity earnings from Chandler Dividends declared Investment in Chandler 12/31/21 Explanatory comments: Part b. Prepare a December 31, 2021 BROOKS AND CONSOLIDATED SUBSIDIARY Consolidation Vorksheet For Year Ending December 31, 2021 Brooks Chandler Adjustments & Eliminations Debit Credit Consolidated (587,000) 203,000 anoame statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization expenses Equity earnings in Chandler Net income (640,000) 255,000 (126,000) 150,000 (199,000) (560,000) 151,000 (233,000) Statement Retained Earnings Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 (1.835,000) (560,000) 100,000 (2.295,000 (805,000) (233,000) 40,000 (998,000) Balance Sheer Current assets Investment in Chandler 343,000 1,468,000 432,000 Trademarks Patented technology Equipment Total assets 134,000 395,000 693,000 3,033,000 221,000 410,000 341,000 1,404,000 Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity (203,000) (535,000) (2.295,000 (3,033,000 (106,000) (300,000) (998,000) (1,404,000) Parentheses indicate a credit balance