On January 1, Paisley, Inc., paid $560,000 for all of Skyler Corporations outstanding stock. This cash payment was based on a price of $180 per share for Skylers $100 par value preferred stock and $38 per share for its $20 par value common stock. The preferred shares are voting, cumulative, and fully participating. At the acquisition date, the book values of Skylers accounts equaled their fair values. Any excess fair value is assigned to an intangible asset and will be amortized over a 10-year period.

During the year, Skyler sold inventory costing $60,000 to Paisley for $90,000. All but $18,000 (measured at transfer price) of this merchandise has been resold to outsiders by the end of the year. At the end of the year, Paisley continues to owe Skyler for the last shipment of inventory priced at $28,000.

Also, on January 2 Paisley sold Skyler equipment for $20,000 although it had a carrying amount of only $12,000 (original cost of $30,000). Both companies depreciate such property according to the straight-line method with no salvage value. The remaining life at this date was four years.

The following financial statements are for each company for the year ending December 31. Determine consolidated financial totals for this business combination.

	Paisley, Inc.	Skyler Corporation
Sales	$ (800,000)	$(400,000)
Cost of goods sold	528,000	260,000
Expenses	180,000	130,000
Gain on sale of equipment	(8,000)	0
Net income	$ (100,000)	$ (10,000)
Retained earnings, 1/1	$ (400,000)	$(150,000)
Net income	(100,000)	(10,000)
Dividends declared	60,000	0
Retained earnings, 12/31	$ (440,000)	$(160,000)
Cash	$ 30,000	$ 40,000
Accounts receivable	300,000	100,000
Inventory	260,000	180,000
Investment in Skyler Corporation	560,000	0
Land, buildings, and equipment	680,000	500,000
Accumulated depreciation	(180,000)	(90,000)
Total assets	$ 1,650,000	$ 730,000
Accounts payable	$ (140,000)	$ (90,000)
Long-term liabilities	(240,000)	(180,000)
Preferred stock	0	(100,000)
Common stock	(620,000)	(200,000)
Additional paid-in capital	(210,000)	0
Retained earnings, 12/31	(440,000)	(160,000)
Total liabilities and equity	$(1,650,000)	$(730,000)

Calculation of consolidated totals: Consideration transferred for common and preferred stock Skylers book value Excess fair value assigned to intangible assets (10-year life) Annual amortization Ending Intra-entity Gross Profit Ending inventory (at transfer price) Markup Deferred gross profit in ending inventory Effect of intra-Entity Equipment Transfer: Transfer price: Recorded value Depreciation expense Accumulated depreciation Gain on sale Historical cost: Recorded value Depreciation expense Accumulated depreciation Paisley, Inc. and Skyler Corp. Consolidated Worksheet Year Ending December 31 Calculation of consolidated totals: Consideration transferred for common and preferred stock Skylers book value Excess fair value assigned to intangible assets (10-year life) Annual amortization Ending Intra-entity Gross Profit Ending inventory (at transfer price) Markup Deferred gross profit in ending inventory Effect of intra-Entity Equipment Transfer: Transfer price: Recorded value Depreciation expense Accumulated depreciation Gain on sale Historical cost: Recorded value Depreciation expense Accumulated depreciation Paisley, Inc. and Skyler Corp. Consolidated Worksheet Year Ending December 31