On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $1,993,850 cash. On the acquisition date, GaugeRite had the following balance sheet:

Cash	$	65,000		Accounts payable	$	126,000
Accounts receivable		108,000		Long-term debt		1,003,000
Land		772,000		Common stock		1,030,000
Equipment (net)		1,905,000		Retained earnings		691,000
	$	2,850,000			$	2,850,000

At the acquisition date, the following allocation was prepared:

Fair value of consideration transferred				$	1,993,850
Book value acquired					1,721,000
Excess fair value over book value					272,850
To in-process research and development	$	63,250
To equipment (8-year remaining life)		77,600			140,850
To goodwill (indefinite life)				$	132,000

Although at acquisition date Procise had expected $63,250 in future benefits from GaugeRites 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.

	Procise				GaugeRite
Sales	$	(3,689,200	)		$	(1,256,750	)
Cost of goods sold		1,757,500				810,000
Depreciation expense		328,000				138,000
Other operating expenses		218,000				34,750
Subsidiary income		(264,300	)			0
Net income	$	(1,650,000	)		$	(274,000	)
Retained earnings 1/1/18	$	(3,010,000	)		$	(920,000	)
Net income		(1,650,000	)			(274,000	)
Dividends declared		100,000				25,750
Retained earnings 12/31/18	$	(4,560,000	)		$	(1,168,250	)
Cash	$	103,050			$	\10,750	\
Accounts receivable		846,000				222,000
Inventory		929,000				619,000
Investment in GaugeRite		2,388,450				0
Land		3,572,500				778,000
Equipment (net)		5,060,000				1,827,500
Goodwill		337,000				0
Total assets	$	13,236,000			$	3,457,250
Accounts payable	$	(261,000	)		$	(421,000	)
Long-term debt	$	(3,265,000	)		$	(838,000	)
Common stock		(5,150,000	)			(1,030,000	)
Retained earnings 12/31/18		(4,560,000	)			(1,168,250	)
Total liabilities and equity	$	(13,236,000	)		$	(3,457,250	)

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.

Complete this question by entering your answers in the tabs below.

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

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Procise and Subsidiary GaugeRite
Consolidated Worksheet
for the year ended December 31, 2018
			Consolidation Entries
Accounts	12/31/18 Procise	12/31/18 GaugeRite	Debit	Credit	Consolidated Totals
Sales	$(3,689,200)	$(1,256,750)
Cost of goods sold	1,757,500	810,000
Depreciation expense	328,000	138,000
Other operating expenses	218,000	34,750
Subsidiary income	(264,300)	0
Net Income	$(1,650,000)	$274,000
Retained earnings 1/1/18	$(3,010,000)	$(920,000)
Net Income	(1,650,000)	(274,000)
Dividends declared	100,000	25,750
Retained earnings 12/31/18	$(4,560,000)	$(1,168,250)
Cash	$103,050	$10,750
Accounts receivable	846,000	222,000
Inventory	929,000	619,000
Investment in GaugeRite	2,388,450	0
Land	3,572,500	778,000
Equipment (net)	5,060,000	1,827,500
Goodwill	337,000	0
Total assets	$13,236,000	$3,457,250
Accounts payable	$(261,000)	$(421,000)
Long-term debt	(3,265,000)	(838,000)
Common stockProcise	(5,150,000)
Common stockGaugeRite		(1,030,000)
Retained earnings 12/31/18	(4,560,000)	(1,168,250)
Total liabilities and equity	$(13,236,000)	$(3,457,250)