On January 1, 2018, Brooks Corporation exchanged $1,288,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,165,000. 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 $288,000 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. $ $ (656,500) 235,000 (165,000) 139,000 (190,000) $ (637,500) (650,000) 243,000 0 169,000 $ (238,000) 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 $(1,990,000) (637,500) 150,000 $(2,477,500) $ (865,000) (238,000) 70,000 $(1,033,000) $ 517,500 1,573,000 128,000 348,000 654,000 $ 3,220,500 $ (200,000) (535,000) (2,477,500) $(3,220,500) $ 395,000 0 289,000 471,000 336,000 $ 1,491,000 $ (158,000) (300,000) (1.033,000) $(1,491, 000) Retained earnings, 12/31 Total liabilities and equity (4,471,500) $(3,220,500) (1,033, VVU) $(1,491,000) 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 Prepare a December 31, 2018, consolidated worksheet for Brooks and Chandler. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) BROOKS AND CHANDLER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Brooks Chandler Debit Credit Consolidated Totals Income Statement Revenues $ (656,500) $ (650,000) $ (1,306,500) Check my work mode : This shows what is correct or incorrect for the work you Required A Required B Determine the following account balances. $ 1,288,000 Consideration transferred Chandler book value (given) Technology undervaluation $ 1,165,000 288,000 Acquisition fair value of net assets Gain on bargain purchase Chandler net income Technology amortization 1,453,000 $ 165,000 $ 238,000 (48,000) Equity earnings in Chandler Fair value of net assets at acquisition-date Equity earnings in Chandler Dividends declared $ 190,000 $ 1,453,000 190,000 (70,000) Investment in Chandler 12/31/18 $ 1,573,000 Required A Required B > Prev 3 of 7 18 MacBook Air Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Brooks Chandler Debit Credit Consolidated Totals ok Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings in Chandler Net income $ (656,500) $ (650,000) 235,000 243,000 (165,000) 0 139,000 169,000 (190,000) 0 $ (637,500) $ (238,000) $ (1,306,500) 478,000 (165,000) 356,000 0 $ (637,500) nces 48,000 190,000 865,000 Statement of Retained Earnings Retained earings, 1/1 Net income Dividends declared Retained earnings, 12/31 $(1.990,000) $ (865,000) (637,500) (238,000) 150,000 70,000 $(2,477,500) $(1,033,000) $ (1,990,000) (637,500) 150,000 $ (2,477,500) 70,000 $ 912,500 70,000 1,643,000 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets $ 517,500 $ 395,000 1,573,000 0 128,000 289,000 348,000 471,000 654,000 336.000 $ 3,220,500 $ 1.491,000 288,000 48,000 417,000 1,059,000 990,000 865,000 statement of Retainea Earnings Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 $(1,990,000) $ (865,000) (637,500) (238,000) 150,000 70,000 $(2,477,500) $ (1,033,000) $ (1,990,000) (637,500) 150,000 $ (2,477,500) 70,000 $ 912,500 70,000 1,643,000 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets 517,500 $ 395,000 1,573,000 0 128,000 289,000 348,000 471,000 654,000 336,000 $ 3,220,500 $ 1,491,000 288,000 48,000 417,000 1,059,000 990,000 $ (366,000) Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity $ (208,000) $ (158,000) (535,000) (300,000) 300,000 (2.477,500) (1,033,000) $(3,220,500) $(1,491,000) $ 1,761,000 $ (2,477,500) 1,761,000 $ (3,378,500) Required A Required On January 1, 2018, Brooks Corporation exchanged $1,288,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,165,000. 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 $288,000 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. $ $ (656,500) 235,000 (165,000) 139,000 (190,000) $ (637,500) (650,000) 243,000 0 169,000 $ (238,000) 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 $(1,990,000) (637,500) 150,000 $(2,477,500) $ (865,000) (238,000) 70,000 $(1,033,000) $ 517,500 1,573,000 128,000 348,000 654,000 $ 3,220,500 $ (200,000) (535,000) (2,477,500) $(3,220,500) $ 395,000 0 289,000 471,000 336,000 $ 1,491,000 $ (158,000) (300,000) (1.033,000) $(1,491, 000) Retained earnings, 12/31 Total liabilities and equity (4,471,500) $(3,220,500) (1,033, VVU) $(1,491,000) 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 Prepare a December 31, 2018, consolidated worksheet for Brooks and Chandler. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) BROOKS AND CHANDLER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Brooks Chandler Debit Credit Consolidated Totals Income Statement Revenues $ (656,500) $ (650,000) $ (1,306,500) Check my work mode : This shows what is correct or incorrect for the work you Required A Required B Determine the following account balances. $ 1,288,000 Consideration transferred Chandler book value (given) Technology undervaluation $ 1,165,000 288,000 Acquisition fair value of net assets Gain on bargain purchase Chandler net income Technology amortization 1,453,000 $ 165,000 $ 238,000 (48,000) Equity earnings in Chandler Fair value of net assets at acquisition-date Equity earnings in Chandler Dividends declared $ 190,000 $ 1,453,000 190,000 (70,000) Investment in Chandler 12/31/18 $ 1,573,000 Required A Required B > Prev 3 of 7 18 MacBook Air Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Brooks Chandler Debit Credit Consolidated Totals ok Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings in Chandler Net income $ (656,500) $ (650,000) 235,000 243,000 (165,000) 0 139,000 169,000 (190,000) 0 $ (637,500) $ (238,000) $ (1,306,500) 478,000 (165,000) 356,000 0 $ (637,500) nces 48,000 190,000 865,000 Statement of Retained Earnings Retained earings, 1/1 Net income Dividends declared Retained earnings, 12/31 $(1.990,000) $ (865,000) (637,500) (238,000) 150,000 70,000 $(2,477,500) $(1,033,000) $ (1,990,000) (637,500) 150,000 $ (2,477,500) 70,000 $ 912,500 70,000 1,643,000 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets $ 517,500 $ 395,000 1,573,000 0 128,000 289,000 348,000 471,000 654,000 336.000 $ 3,220,500 $ 1.491,000 288,000 48,000 417,000 1,059,000 990,000 865,000 statement of Retainea Earnings Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 $(1,990,000) $ (865,000) (637,500) (238,000) 150,000 70,000 $(2,477,500) $ (1,033,000) $ (1,990,000) (637,500) 150,000 $ (2,477,500) 70,000 $ 912,500 70,000 1,643,000 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets 517,500 $ 395,000 1,573,000 0 128,000 289,000 348,000 471,000 654,000 336,000 $ 3,220,500 $ 1,491,000 288,000 48,000 417,000 1,059,000 990,000 $ (366,000) Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity $ (208,000) $ (158,000) (535,000) (300,000) 300,000 (2.477,500) (1,033,000) $(3,220,500) $(1,491,000) $ 1,761,000 $ (2,477,500) 1,761,000 $ (3,378,500) Required A Required