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On January 1, 2020, Innovus, Inc., acquired 100 percent of the common stock of Chip Tech Company for $670,000 in cash and other fair-
On January 1, 2020, Innovus, Inc., acquired 100 percent of the common stock of Chip Tech Company for $670,000 in cash and other fair- value consideration. Chip Tech's fair value was allocated among its net assets as follows: Fair value of consideration transferred for ChipTech Book value of ChipTech: Common stock and Additional Paid-In Capital (APIC) Retained earnings Excess fair value over book value to Trademark (10-year remaining life) Existing technology (5-year remaining life) Goodwill $670,000 $130,000 370,000 500,000 170,000 $ 40,000 80,000 120,000 $ 50,000 The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date): Revenues Cost of goods sold Depreciation expense Amortization expense Dividend income Net income Retained earnings 1/1/21 Net income Dividends declared Retained earnings 12/31/21 Current assets Investment in ChipTech Equipment (net) Trademark Existing technology Goodwill Total assets Liabilities Common stock Additional paid-in capital Retained earnings 12/31/21 Total liabilities and equity Innovus $ (990,000) 500,000 100,000 55,000 (40,000) $ (375,000) $(1,555,000) (375,000) 250,000 $(1,680,000) $ 960,000 670,000 765,000 235,000 -0- ChipTech $(210,000) 90,000 5,000 18,000 -0- $ (97,000) $(450,000) (97,000) 40,000 $(507,000) $355,000 225,000 100,000 45,000 450,000 -0- $ 3,080,000 $725,000 $ (780,000) ($8,000) (500,000) (100,000) (120,000) (30,000) (1.680,000) (507,000) $(3,080,000) $(725,000)
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