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On January 1, 2020, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $2,099,600 cash. On the acquisition date,
On January 1, 2020, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $2,099,600 cash. On the acquisition date, GaugeRite had the following balance sheet Cash Accounts receivable Land Equipment (net) Total assets Accounts payable Long-term debt Common stock $ 154,000 905,000 1,049,000 2000 730,000 1,942,000 $2,961,000 Retained earnings Total liabilities and equity 743,000 $2,961,000 At the acquisition date, the following allocation was prepared: Fair value of consideration transferred Book value acquired Excess fair value over book value To in-process research and development To equipment (8-year remaining life) To goodwill (indefinite life) $ 44,000 133,600 $ 2,099,600 1,792,000 387,600 177,608 130,000 Although at acquisition date Procise had expected $44,000 in future benefits from GaugeRite's in-process research and development project, by the end of 2020 it was apparent that the research project was a failure with no future economic benefits On December 31, 2021, Procise and GaugeRite submitted the following financial statements for consolidation. There were no intra- entity payables on that date. Sales Cost of goods sold. Depreciation expense Other operating expenses Subsidiary income Net Income Retained earnings 1/1/21 Net income Procise $ (3,795,200) Guerite $(1,166,258) 1,810,000 745,000 335,000 223,000 (220,300) $ (1,647,500) $ (3,052,500) (1,647,500) 300 000 147,000 37,250 $ (237,000) $ (936,000) (237,000) 26,225
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