Question
ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,400,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000
ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,400,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000 was recognized and is being amortized at the rate of $16,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $600,000 at the acquisition date. The 2018 financial statements are as follows:
ProForm | ClipRite | ||||||
Sales | $ | (910,000 | ) | $ | (820,000 | ) | |
Cost of goods sold | 590,000 | 455,000 | |||||
Operating expenses | 210,000 | 155,000 | |||||
Dividend income | (63,000 | ) | 0 | ||||
Net income | $ | (173,000 | ) | $ | (210,000 | ) | |
Retained earnings, 1/1/18 | $ | (2,000,000 | ) | $ | (960,000 | ) | |
Net income | (173,000 | ) | (210,000 | ) | |||
Dividends declared | 210,000 | 90,000 | |||||
Retained earnings, 12/31/18 | $ | (1,963,000 | ) | $ | (1,080,000 | ) | |
Cash and receivables | $ | 510,000 | $ | 410,000 | |||
Inventory | 400,000 | 810,000 | |||||
Investment in ClipRite | 1,400,000 | 0 | |||||
Fixed assets | 1,000,000 | 1,150,000 | |||||
Accumulated depreciation | (200,000 | ) | (300,000 | ) | |||
Totals | $ | 3,110,000 | $ | 2,070,000 | |||
Liabilities | $ | (647,000 | ) | $ | (490,000 | ) | |
Common stock | (500,000 | ) | (500,000 | ) | |||
Retained earnings, 12/31/18 | (1,963,000 | ) | (1,080,000 | ) | |||
Totals | $ | (3,110,000 | ) | $ | (2,070,000 | ) | |
ClipRite sold ProForm inventory costing $80,000 during the last six months of 2017 for $200,000. At year-end, 30 percent remained. ClipRite sells ProForm inventory costing $255,000 during 2018 for $360,000. At year-end, 10 percent is left. With these facts, determine the consolidated balances for the following:
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