Question
ProForm acquired 80 percent of ClipRite on June 30, 2020, for $1,440,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $760,000
ProForm acquired 80 percent of ClipRite on June 30, 2020, for $1,440,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $760,000 was recognized and is being amortized at the rate of $19,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $360,000 at the acquisition date. The 2021 financial statements are as follows:
ProForm | ClipRite | ||||||
Sales | $ | (890,000 | ) | $ | (780,000 | ) | |
Cost of goods sold | 580,000 | 445,000 | |||||
Operating expenses | 190,000 | 145,000 | |||||
Dividend income | (56,000 | ) | 0 | ||||
Net income | $ | (176,000 | ) | $ | (190,000 | ) | |
Retained earnings, 1/1/21 | $ | (2,200,000 | ) | $ | (940,000 | ) | |
Net income | (176,000 | ) | (190,000 | ) | |||
Dividends declared | 190,000 | 70,000 | |||||
Retained earnings, 12/31/21 | $ | (2,186,000 | ) | $ | (1,060,000 | ) | |
Cash and receivables | $ | 490,000 | $ | 390,000 | |||
Inventory | 380,000 | 790,000 | |||||
Investment in ClipRite | 1,440,000 | 0 | |||||
Fixed assets | 1,900,000 | 1,050,000 | |||||
Accumulated depreciation | (900,000 | ) | (200,000 | ) | |||
Totals | $ | 3,310,000 | $ | 2,030,000 | |||
Liabilities | $ | (824,000 | ) | $ | (670,000 | ) | |
Common stock | (300,000 | ) | (300,000 | ) | |||
Retained earnings, 12/31/21 | (2,186,000 | ) | (1,060,000 | ) | |||
Totals | $ | (3,310,000 | ) | $ | (2,030,000 | ) | |
(Note: Parentheses indicate a credit balance.)
ProForm sold ClipRite inventory costing $78,000 during the last six months of 2020 for $180,000. At year-end, 30 percent remained. ProForm sold ClipRite inventory costing $245,000 during 2021 for $340,000. At year-end, 10 percent is left.
Determine the consolidated balances for the following accounts: (Input all amounts as positive values.)
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