On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $2,106,550 cash. On the acquisition date, GaugeRite had the following balance sheet Cash Accounts receivable Land Equipment (net) $ 87,000 Accounts payable $ 172,000 977,000 1,084,000 727,000 $2,960,000 196,000 724,000 Long-term debt Common stock 1,953,000 Retained earnings $2,960,000 At the acquisition date, the following allocation was prepared Fair value of consideration transferred Book value acquired Excess fair value over book value 2,106,550 1,811,000 295,550 To in-process research and development To equipment (8-year remaining life) To goodwill (indefinite life) 66,750 96,800 163,550 132,000 Although at acquisition date Procise had expected $66,750 in future benefits from GaugeRite's in-process research and development project, by the end of 2017, it was apparent that the research project was a failure with no future economic benefits On December 31, 2018, Procise and GaugeRite submitted the following trial balances for consolidation. There were no intra-entity payables on that date GaugeRite $ (3,535,850 $(1,169,500) 745,000 136,000 34,500 Procise Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income 1,640,000 332,000 220,750 (241,900) s (1,585,000) $ (3,045,000) (1,585,000) $ (254,000) $ (974,000) (254,000) Net income Retained earnings 1/1/18 Net income Dividends declared 100,000 27,100 Retained earnings 12/31/18 $ (4,530,000) $ (1,200,900) Cash Accounts receivable Inventory Investment in GaugeRte Land Equipment (net) Goodwill 2,500 913,000 940,000 2,489,500 3,490,000 5,127,500 295,000 13,257,500 $129,900 240,000 714,000 716,000 1,805,000 Total assets 3,504,900 Accounts payable Long-term debt Common stock Retained earnings 12/31/18 $(275,000) (413,000) $ (3,302,500) (807,000) (1,084,000) 4,530,000) (1,200,900) (5,150,000) Total liabilities and equity (13,257,500) $ (3,504,900) Required A Required C Show how Procise derived its December 31, 2018, Investment in GaugeRite account balance. (Amounts to be deducted should be indicated by a minus sign.) Consideration transferred 1/1/17 Investment balance 12/31/18 Procise and Subsidiary GaugeRite Consolidated Worksheet for the year ended December 31, 2018 Consolidation Entries 12/31/18 12/31/18 Procise GaugeRite Debit Credit Consolidated Accounts Totals Sales 3,535,850) (1,169,500 1,640,000 745,000 Cost of goods sold Depreciation 332,000 136,000 34,500 0 1585,000) $ 254,000 expense Other operating expenses 220,750 Subsidiary income(241,900) Net Income Retained earnings$ 3,045,000)(974,000 (1,585,000)(254,000) Net Income Dividends declared 100,000 27,100 Retained earnings $ 12/31/18 4,530,000)/(1,200,900 Cash Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill $2,500 S 29,900 913,000 240,000 940,000 714,000 2,489,500 3,490,000 716,000 5,127,500 1,805,000 295,000 Total assets 13,257,500 3,504,900 Accounts payable $ (275,000) 413.000 Long-term debt Common stock- 1 (5,150,000) Procise Common stock- GaugeRite Retained earnings(4,530,000) (1,200,900) 12/31/18 (3,302,500) (807,000) (1,084,000) Total liabilities and $ equit 0 $ 13,257,500) (3,504,900