On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $1,968,000 cash. On the acquisition date, GaugeRite had the following balance sheet: Cash Accounts receivable Land Equipment (net) $ 15,000 145,000 769,000 1,916,000 $2,845,000 Accounts payable Long-term debt Common stock Retained earnings $ 136,000 963,000 1,028,000 718,000 $2,845,000 At the acquisition date, the following allocation was prepared: $ 1,968,000 1,746,000 222,000 Fair value of consideration transferred Book value acquired Excess fair value over book value To in-process research and development To equipment (8-year remaining life) To goodwill (indefinite life) $ 52,000 60,000 112,000 110,000 $ Although at acquisition date Procise had expected $52,000 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 Although at acquisition date Procise had expected $52,000 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 $(1,160, 250) 750,000 141, 000 35,250 Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income Net income Retained earnings 1/1/18 Net income Dividends declared Retained earnings 12/31/18 Cash Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill Total assets Accounts payable Long-term debt Procise $ (3,751,500) 1,797,500 335,000 223,000 (226,500) $ (1,622,500) $ (3, 155, 000) (1,622,500) 200,000 $ (4,577,500) 14,200 899,000 903,000 2,321,300 3,497,500 5,180,000 342,000 $ 13,157,000 $ (207,000) $ (3,222,500) $ (234,000) $ (930, 000) (234, 000) 25,700 $(1,138, 300) \87,800 238,000 411,000 785, 000 1,862,500 $ 3,384,300 $ (415, 000) $ (803, 000) $(1, 138, 300) $ 187,800 238,000 411,000 785,000 1,862,500 Retained earnings 12/31/18 Cash Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill Total assets Accounts payable Long-term debt Common stock Retained earnings 12/31/18 Total liabilities and equity $ (4,577,500) 14, 200 899,000 903,000 2,321,300 3,497,500 5,180,000 342,000 $ 13, 157,000 $ (207,000) $ (3,222,500) (5,150,000) (4,577,500) $(13, 157, 000) $3,384,300 $ (415, 000) $ (803, 000) (1,028, 000) (1,138,300) $(3,384,300) a. Show how Procise derived its December 31, 2018, Investment in GaugeRite account balance. c. Prepare a consolidated worksheet for Procise and GaugeRite as of December 31, 2018. 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.) $ 1.968,000 Consideration transferred 1/1/17 Increase in GaugeRite's retained earnings to 1/1/18 In-process R&D write-off in 2017 Amortizations 2017 Income 2018 Dividends declared 2018 Amortization 2018 Investment balance 12/31/18 $ 1.968,000 Required A Required C > Show less Consolidated ? Totals Accounts Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income Net Income Procise and Subsidiary GaugeRite Consolidated Worksheet for the year ended December 31, 2018 Consolidation Entries 12/31/18 12/31/18 Debit Credit Procise GaugeRite $ (3,751,500) $ (1,160,250) 1,797,500 750,000 335,000 141,000 223,000 35,250 (226,500) 011 $ (1,622,500) $ 234,000 $ 0 Retained earnings 11/18 Net Income Dividends declared Retained earnings 12/31/18 $ (3,155,000) (1,622,500) 200,000 $ (4.577,500) $ (930,000) (234,000) 25,700 $ (1.138,300) 25, Cash $ $ 14,200 899,000 87,800 238,000 Accounts receivable Retained earnings 1/1/18 Net Income Dividends declared Retained earnings 12/31/18 $ (3,155,000) (1,622,500) 200,000 $ (4,577,500) $ (930,000) (234,000) 25,700 $ (1,138,300) $ $ $ 87,800 238,000 411,000 Cash Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill Total assets 14,200 899,000 903,000 2,321,300 3,497,500 5,180,000 342,000 13,157,000 785,000 1,862,500 $ $ 3,384,300 $ $ (207,000) (3.222,500) (5,150,000) (415.000) (803,000) Accounts payable Long-term debt Common stock-Procise Common stockGaugeRite Retained earnings 12/31/18 Total liabilities and equity (4,577,500) $ (13,157,000) (1,028,000) (1.138,300) $ (3,384,300) $ 0 $ 0 $ Decuired A Doard On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $1,968,000 cash. On the acquisition date, GaugeRite had the following balance sheet: Cash Accounts receivable Land Equipment (net) $ 15,000 145,000 769,000 1,916,000 $2,845,000 Accounts payable Long-term debt Common stock Retained earnings $ 136,000 963,000 1,028,000 718,000 $2,845,000 At the acquisition date, the following allocation was prepared: $ 1,968,000 1,746,000 222,000 Fair value of consideration transferred Book value acquired Excess fair value over book value To in-process research and development To equipment (8-year remaining life) To goodwill (indefinite life) $ 52,000 60,000 112,000 110,000 $ Although at acquisition date Procise had expected $52,000 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 Although at acquisition date Procise had expected $52,000 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 $(1,160, 250) 750,000 141, 000 35,250 Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income Net income Retained earnings 1/1/18 Net income Dividends declared Retained earnings 12/31/18 Cash Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill Total assets Accounts payable Long-term debt Procise $ (3,751,500) 1,797,500 335,000 223,000 (226,500) $ (1,622,500) $ (3, 155, 000) (1,622,500) 200,000 $ (4,577,500) 14,200 899,000 903,000 2,321,300 3,497,500 5,180,000 342,000 $ 13,157,000 $ (207,000) $ (3,222,500) $ (234,000) $ (930, 000) (234, 000) 25,700 $(1,138, 300) \87,800 238,000 411,000 785, 000 1,862,500 $ 3,384,300 $ (415, 000) $ (803, 000) $(1, 138, 300) $ 187,800 238,000 411,000 785,000 1,862,500 Retained earnings 12/31/18 Cash Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill Total assets Accounts payable Long-term debt Common stock Retained earnings 12/31/18 Total liabilities and equity $ (4,577,500) 14, 200 899,000 903,000 2,321,300 3,497,500 5,180,000 342,000 $ 13, 157,000 $ (207,000) $ (3,222,500) (5,150,000) (4,577,500) $(13, 157, 000) $3,384,300 $ (415, 000) $ (803, 000) (1,028, 000) (1,138,300) $(3,384,300) a. Show how Procise derived its December 31, 2018, Investment in GaugeRite account balance. c. Prepare a consolidated worksheet for Procise and GaugeRite as of December 31, 2018. 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.) $ 1.968,000 Consideration transferred 1/1/17 Increase in GaugeRite's retained earnings to 1/1/18 In-process R&D write-off in 2017 Amortizations 2017 Income 2018 Dividends declared 2018 Amortization 2018 Investment balance 12/31/18 $ 1.968,000 Required A Required C > Show less Consolidated ? Totals Accounts Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income Net Income Procise and Subsidiary GaugeRite Consolidated Worksheet for the year ended December 31, 2018 Consolidation Entries 12/31/18 12/31/18 Debit Credit Procise GaugeRite $ (3,751,500) $ (1,160,250) 1,797,500 750,000 335,000 141,000 223,000 35,250 (226,500) 011 $ (1,622,500) $ 234,000 $ 0 Retained earnings 11/18 Net Income Dividends declared Retained earnings 12/31/18 $ (3,155,000) (1,622,500) 200,000 $ (4.577,500) $ (930,000) (234,000) 25,700 $ (1.138,300) 25, Cash $ $ 14,200 899,000 87,800 238,000 Accounts receivable Retained earnings 1/1/18 Net Income Dividends declared Retained earnings 12/31/18 $ (3,155,000) (1,622,500) 200,000 $ (4,577,500) $ (930,000) (234,000) 25,700 $ (1,138,300) $ $ $ 87,800 238,000 411,000 Cash Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill Total assets 14,200 899,000 903,000 2,321,300 3,497,500 5,180,000 342,000 13,157,000 785,000 1,862,500 $ $ 3,384,300 $ $ (207,000) (3.222,500) (5,150,000) (415.000) (803,000) Accounts payable Long-term debt Common stock-Procise Common stockGaugeRite Retained earnings 12/31/18 Total liabilities and equity (4,577,500) $ (13,157,000) (1,028,000) (1.138,300) $ (3,384,300) $ 0 $ 0 $ Decuired A Doard