On January 1, 2018, Brooks Corporation exchanged $969,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $990,000. Chandlers individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $174,000 with an estimated remaining life of six years. The Chandler acquisition was Brookss 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.
On January 1, 2018. Brooks Corporation exchanged $969,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $990,000. 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 $174,000 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. Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings from Chandler S (525,808) (654,e08) 234,800 162,8e0 (685,88) (258,ee8) $(1,738,88) (698,888) 30,008 285.808 (195,888) 139,808 (229,808) Net income Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared (6e5,8e8) (258,808) $(2,885,8)(918,8e8) Retained earnings, 12/31 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment $347,8e8388,80 1,363,8e8 147,ee8 329,83e 239,808 435,808 652,808375,898 1,357,888 $ 2,838,888 Total assets Liabilities Common stock Retained earnings, 12/31 $ (218,88) (139,808) (380,808) 918,88e $(2,838,88) $(1,357,ee8) (535,898) () 2,885,8e8 Total liabilities and equity Note: Parentheses indicate a credit balance. a. Determine the following account balances: . Gain on bargain purchase . Eamings 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. nsideration transferred Chandler book value (given) echnology undervaluation sition fair value of net assets Gain on bargain purchase Chandler net income echnology amortization Equity earnings in Chandler air value of net assets at acquisition-date Equity earnings in Chandler vidends declared Investment in Chandler 12/31/18 Required B> 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 For Year Ending December 31, 2018 Consolidation Entries Brooks Chandler Debit Credit Totals Income Statement Revenues Cost of goods sold Sain on bargain purchase Depreciation and amortization Equity eamings in Chandler S (525,000)S(654,000) 234.000 205,000 (195,000) 139.000 (229,000) 162,000 Net income S (605,000)3 (258,000) Statement of Retained Earnings Retained earnings, 1 Net income Dividends declared S (1,730,000)S(690,000) (605,000) (258,000) 30,000 $(2,085,000)S(18,000) 250,000 Retained e arnings, 12/31 Balance Sheet Current assets Investment in Chandler $ 347,000 IS 308,000 239.000 435,000 375,000 S 2.838,000 S 1,357.000 1.363,000 147,000 329,000 852,000 Patented technology Equipment Total assets S (218,000)3 (139,000) 55,000(300 (2,085,000) (18,000) S (2,838,000)1,357,000) Common stock Retained earnings, 12/31 Total liabilities and equity
