Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PLEASE HELP WITH THE ONES MARKED WRONG PLEASE HELP WITH THE ONES MARKED WRONG On January 1, 2018, Brooks Corporation exchanged $1,234,500 fair-value consideration for
PLEASE HELP WITH THE ONES MARKED WRONG PLEASE HELP WITH THE ONES MARKED WRONG
On January 1, 2018, Brooks Corporation exchanged $1,234,500 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,102,500. 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 $312,000 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, Ind Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value On December 31, 2018, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period Brooks Corp. Chandler Inc. Income Statement (497,500)(586,000) 209,000 (180,000) 146,000 (200,000) Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization 177,000 157,000 Equity earnings from Chandler $ (522,500)(252,000) Net income Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared $ (1,885,000) $(802,500) (522,500) 200,000 (252,000) 50,000 $ (2,207,500) (1,004,500) Retained earnings, 12/31 Balance Sheet S 233,000 1,564, 500 133,000 379,000 670,000 490,500 Current assets Investment in Chandler Trademarks 257,000 419,000 337,000 Patented technology Equipment 1,503,500 s 2,979,500 Total assets S (237,000) (199,000) (535, 000) (2,207,500) Liabilities Common stock (300,000) (1,004,500) Retained earnings, 12/31 $ (2,979,500) $(1, 503,500) Total liabilities and equity Note: Parentheses indicate a credit balance a. Determine the following account balances a. Determine the following account balances .Gain on bargain purchase Earnings from Chandler Investment in Chandler b. Prepare a December 31, 2018, consolidated worksheet for Brooks and Chandler. Complete this question by entering your answers in the tabs beloww Required A Required B Determine the following account balances Consideration transferred $1,234,500 S 312,000 1,102,500 Technology undervaluation Chandler book value (given) Acquisition fair value of net assets 1,414,500 $ 180,000 Gain on bargain purchase $ 252,000 52,000 Chandler net income Technology amortization $ 200,000 Equity earnings in Chandler 1,414,500 Fair value of net assets at acquisition-date 200,000 Equity earnings in Chandler 50,000 Dividends declared Investment in Chandler 12/31/18 S 1,564,500 BROOKS AND CHANDLER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Consolidated Totals Accounts Chandler Debit Credit BrookS Income Statement S (1,083,500) 386,000 $ (497,500) (586,000) Revenues Cost of goods sold 209,000 177,000 (180,000) (180,000) Gain on bargain purchase 355,000 52,000 Depreciation and amortization 146,000 157,000 (200,000) 200,000 0 Equity earnings in Chandler S (522,500) $ (522,500) (252,000) Net income Statement of Retained Earnings 1,885,000) (802,500) (522,500) 802,500 S (1,885,000) Retained earnings, 1/1 (522,500) Net income (252,000) 0, 200,000 50,000 Dividends declared 200,000 S (2,207,500) Retained earnings, 12/31 (2.207,500)(1,004.500) Balance Sheet $ 233,000 $ 490,500 723.500 Current assets 0,01,614,500 Investment in Chandler 1,564,500 0 390,000 12,000 52,0001,058,000 Trademarks 133,000 257,000 419,000 Patented technology 379,000 1,007,000 670,000 337,000 Equipment $ 2,979,500 1,503,500 Total assets S (436,000) $ (237,000) (199,000) Liabilities 300,000 (300,000) Common stock (535,000) (300 (2,207,500) 1,004,500) (535,000) Retained earnings, 12/31 2,207,500) OS (3,178,500) Total liabilities and equity (2,979,500) (1,503,500) Required A Required BStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started