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, 2018, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period.

a. Determine the following account balances:

• Gain on bargain purchase.
• Earnings from Chandler.
• Investment in Chandler.

b. Prepare a December 31, 2018, consolidated worksheet for Brooks and Chandler.

Brooks Corp. Chandler Inc. Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earninqs from Chandler $ (677,500) (668,000) 240,000 (120,000) 138,000 253,000) 208,000 161,000 Net income $(672,500) $ (299,000) Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared (1,645,000) $(840,000) (672,500) 150,000 (299,000) 70,000 $ (2,167,500) $(1,069,000) Retained earnings, 12/31 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment $156,500 1,599,000 129,000 304,000 684,000 $ 2,872,500 $ 462,000 262,000 475,000 305,000 $ 1,504,000 $ (170,000) (135,000) Total assets Liabilities Common stock Retained earnings, 12/31 (535,000) (2,167,500) (300,000) 1,069,000 Total liabilities and equity $ (2,872,500) $(1,504,000) Note: Parentheses indicate a credit balance Brooks Corp. Chandler Inc. Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earninqs from Chandler $ (677,500) (668,000) 240,000 (120,000) 138,000 253,000) 208,000 161,000 Net income $(672,500) $ (299,000) Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared (1,645,000) $(840,000) (672,500) 150,000 (299,000) 70,000 $ (2,167,500) $(1,069,000) Retained earnings, 12/31 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment $156,500 1,599,000 129,000 304,000 684,000 $ 2,872,500 $ 462,000 262,000 475,000 305,000 $ 1,504,000 $ (170,000) (135,000) Total assets Liabilities Common stock Retained earnings, 12/31 (535,000) (2,167,500) (300,000) 1,069,000 Total liabilities and equity $ (2,872,500) $(1,504,000) Note: Parentheses indicate a credit balance