On January 1, 2021, Brooks Corporation exchanged $1,296,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,140,000. 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 $276,000 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, 2021, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Brooks Corp. Chandler Inc. $ Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings from Chandler $ (677,500) 240,000 (120,000) 138,000 (253, 000) (668,000) 208,000 0 161,000 Net income $ (672,500) $ (299, 000) Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared $(1,645, 000) (672,500) 150,000 $ (840,000) (299, 000) 70,000 Retained earnings, 12/31 $(2, 167, 500) $(1,069, 000) Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment $ 156,500 1,599,000 129,000 304,000 684,000 $ 462,000 0 262,000 475,000 305,000 $ 1,504,000 Total assets $ 2,872,500 Liabilities Common stock Retained earnings, 12/31 $ (170,000) (535, 000) (2,167,500) (135, 000) (300,000) (1,069, 000) $(1, 504, 000) Total liabilities and equity $(2,872,500) Note: Parentheses indicate a credit balance. Required A Required B Determine the following account balances. (Input all amounts as positive values.) Accounts Amounts 0 Gain on bargain purchase Equity earnings in Chandler Investment in Chandler 12/31/21 BROOKS AND CHANDLER Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Brooks Chandler Debit Credit Consolidated Totals $ (677,500) $ (668,000) 240,000 208,000 Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings in Chandler (120,000) 0 138,000 161,000 0 (253,000) $ (672,500) $ (299,000) Net income Statement of Retained Earnings Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 $(1,645,000) $ (840,000) (672,500) (299,000) 150,000 70,000 $(2,167,500) $(1,069,000) Balance Sheet Current assets Investment in Chandler $ 156,500 $ 462,000 1,599,000 0 Trademarks 129,000 262,000 304,000 475,000 Patented technology Equipment 684,000 305,000 $ 2,872,500 $ 1,504,000 Total assets Liabilities Common stock $ (170,000) $ (135,000) (535,000) (300,000) (2,167,500) (1,069,000) $(2,872,500) $ (1,504,000) $ Retained earnings, 12/31 Total liabilities and equity 0 69
