Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2018, Brooks Corporation exchanged $1,235,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler

image text in transcribedimage text in transcribedimage text in transcribed

On January 1, 2018, Brooks Corporation exchanged $1,235,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,185,000. 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 $246,000 with an estimated remaining life of six years. The Chandler acquisition was Brooks'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, 2018, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Brooks Corp. Chandler Inc. $ $ (671,000) 204,000 (466,000) 252,000 (196,000) 139,000 (249,000) (520,000) 177,000 $ $ (290,000) Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings from Chandler Net income Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity $(1,830,000) (520,000) 300,000 $(2,050,000) $ (885,000) (290,000) 60,000 $(1,115,000) $ 422,000 $ 142,000 1,620,000 198,000 307,000 625,000 $ 2,892,000 $ (307,000) (535,000) (2,050,000) $(2,892,000) 291,000 455,000 398,000 $ 1,566,000 $ (151,000) (300,000) (1,115,000) $(1,566,000) Note: Parentheses indicate a credit balance. 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. Complete this question by entering your answers in the tabs below. Required A Required B Determine the following account balances. Gain on bargain purchase Equity earnings in Chandler Investment in Chandler 12/31/18

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Proli Footwear Inc An Audit And Fraud Simulation For Team-Based Student Learning

Authors: Patricia Poli, Richard Proctor

2nd Edition

0615455492, 978-0615455495

More Books

Students also viewed these Accounting questions

Question

Should job descriptions be abandoned in recruitment and selection?

Answered: 1 week ago