On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share On that date, Devine had ordinary shares of $3,540,000, and retained earnings of $2,040,000 When acquired, Devine had inventories with fair values $80,000 less than carrying amount, a parcel of land with a fair value $140,000 greater than the carrying amount, and equipment with a fair value $140,000 less than carrying amount There were also internally generated patents with an estimated market value of $340,000 and a five year remaining life A long term liability had a market value $120,000 greater than carrying amount this liability was paid off December 31, Year 10 All other identifiable assets and liabilities of Devine had fair values equal to their carrying amounts Devines accumulated depreciation on the plant and equipment was $440,000 at the date of acquisition The year 11 financial statements for Vine and Devine were as follows INCOME STATEMENTS For year ending December 31, Year 11 (in thousands of dollars) Vine Devine Sales $ 14,000 $ 5,400 Dividends, investment income and gains 2,800 3,400 Total income 16,800 8,800 Cost of goods sold 11,600 3,900 Other expenses 500 500 Income taxes 200 200 Total expenses (12,300 ) (4,600 ) Profit $ 4,500 $ 4,200 STATEMENTS OF FINANCIAL POSITION December 31, Year 11 (in thousands of dollars) Vine Devine Land $ 6,000 $ 2,500 Plant and equipment 17,400 10,400 Accumulated depreciation (7,200 ) (6,400 ) Investment in Devine, cost 4,940 Inventories 3,200 1,000 Cash and current receivables 1,860 3,300 Total assets $ 26,200 $ 10,800 Ordinary shares $ 10,000 $ 3,540 Retained earnings 10,300 6,000 Long term liabilities 1,600 700 Deferred income taxes 2,600 100 Current liabilities 1,700 460 Total equity and liabilities $ 26,200 $ 10,800 Additional Information At the acquisition date, the equipment had an expected remaining useful life of ten years Both companies use the straight line method for all depreciation and amortization calculations and the FIFO inventory cost flow assumption Assume a 40 income tax rate on all applicable items and that there were no impairment losses for goodwill On September 1, Year 11, Devine sold a parcel of land to Vine and recorded a total non operating gain of $340,000 Sales of finished goods from Vine to Devine totalled $940,000 in Year 10 and $1,940,000 in Year 11 These sales were priced to provide a gross profit margin on selling price of 33 to the Vine Company Devines December 31, Year 10, inventory contained $282,000 of these sales December 31, Year 11, inventory contained $582,000 of these sales Sales of finished goods from Devine to Vine were $740,000 in Year 10 and $1,140,000 in Year 11 These sales were priced to provide a gross profit margin on selling price of 40 to the Devine Company Vines December 31, Year 10, inventory contained $40,000 of these sales the December 31, Year 11, inventory contained $440,000 of these sales Vines investment in Devines account is carried in accordance with the cost method and includes advances to Devine of $140,000, which are also included in current liabilities There are no intercompany amounts other than those noted, except for the dividends of $500,000 (total amount) declared and paid by Devine Required (a) The allocation of the acquisition cost at acquisition and the related changes to acquisition differential schedule (Leave no cells blank be certain to enter 0 wherever required Enter your answers in dollars, not in thousands of dollars Input all values as positive numbers Do not round gross profit percentage for intermediate computations Omit $ sign in your response ) (b) Prepare the consolidated financial statements using the worksheet approach (Values in the first two columns and last column of the Balance Sheet (the parent , subsidiary and consolidated balances) that are to be deducted should be indicated with a minus sign, while all values in the Entry columns and Income Statement entry columns should be entered as positive values For accounts where multiple adjusting 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 Leave no cells blank be certain to enter 0 wherever required Enter your answers in dollars Round your answer to nearest whole dollars Omit $ sign in your response )

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On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that

On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that date, Devine had ordinary shares of $3,540,000, and retained earnings of $2,040,000. When acquired, Devine had inventories with fair values $80,000 less than carrying amount, a parcel of land with a fair value $140,000 greater than the carrying amount, and equipment with a fair value $140,000 less than carrying amount. There were also internally generated patents with an estimated market value of $340,000 and a five-year remaining life. A long-term liability had a market value $120,000 greater than carrying amount; this liability was paid off December 31, Year 10. All other identifiable assets and liabilities of Devine had fair values equal to their carrying amounts. Devines accumulated depreciation on the plant and equipment was $440,000 at the date of acquisition. The year 11 financial statements for Vine and Devine were as follows:

INCOME STATEMENTS
For year ending December 31, Year 11
(in thousands of dollars)
	Vine			Devine
Sales	$	14,000		$	5,400
Dividends, investment income and gains		2,800			3,400
Total income		16,800			8,800
Cost of goods sold		11,600			3,900
Other expenses		500			500
Income taxes		200			200
Total expenses		(12,300	)		(4,600	)
Profit	$	4,500		$	4,200

STATEMENTS OF FINANCIAL POSITION
December 31, Year 11
(in thousands of dollars)
	Vine			Devine
Land	$	6,000		$	2,500
Plant and equipment		17,400			10,400
Accumulated depreciation		(7,200	)		(6,400	)
Investment in Devine, cost		4,940
Inventories		3,200			1,000
Cash and current receivables		1,860			3,300
Total assets	$	26,200		$	10,800
Ordinary shares	$	10,000		$	3,540
Retained earnings		10,300			6,000
Long-term liabilities		1,600			700
Deferred income taxes		2,600			100
Current liabilities		1,700			460
Total equity and liabilities	$	26,200		$	10,800

Additional Information

At the acquisition date, the equipment had an expected remaining useful life of ten years. Both companies use the straight-line method for all depreciation and amortization calculations and the FIFO inventory cost flow assumption. Assume a 40% income tax rate on all applicable items and that there were no impairment losses for goodwill.
On September 1, Year 11, Devine sold a parcel of land to Vine and recorded a total non-operating gain of $340,000.
Sales of finished goods from Vine to Devine totalled $940,000 in Year 10 and $1,940,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 33 % to the Vine Company. Devines December 31, Year 10, inventory contained $282,000 of these sales; December 31, Year 11, inventory contained $582,000 of these sales.
Sales of finished goods from Devine to Vine were $740,000 in Year 10 and $1,140,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 40% to the Devine Company. Vines December 31, Year 10, inventory contained $40,000 of these sales; the December 31, Year 11, inventory contained $440,000 of these sales.
Vines investment in Devines account is carried in accordance with the cost method and includes advances to Devine of $140,000, which are also included in current liabilities.
There are no intercompany amounts other than those noted, except for the dividends of $500,000 (total amount) declared and paid by Devine.

Required:

(a) The allocation of the acquisition cost at acquisition and the related changes to acquisition differential schedule. (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers in dollars, not in thousands of dollars. Input all values as positive numbers. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.)

(b) Prepare the consolidated financial statements using the worksheet approach. (Values in the first two columns and last column of the Balance Sheet (the "parent", "subsidiary" and "consolidated" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Entry" columns and Income Statement entry columns should be entered as positive values. For accounts where multiple adjusting 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. Leave no cells blank - be certain to enter "0" wherever required. Enter your answers in dollars. Round your answer to nearest whole dollars. Omit $ sign in your response.)