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33. On January 1, 2015, Brooks Corporation exchanged $1,183,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandier hau a book value equal to $1,105,000. Chandler's individual assets and liabilities had fair values equal to their respective book values excent for the patented technology account, which was undervalued by S204,000 with an estimated remaining life of 6 years. The Chandler acquisi- tion was Brooks's only business combination for the year. In case expected synergies did not materialize Brooks Corporation wished to prepare lor a potential future spin-off of Chandler Inc. Therefore Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing valde. On December 31, 2015, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Parentheses indicated credit balances. Brooks Chandler Inc. Corp. Income Statement Revenues Cost of goods sold. Gain on bargain purchase Depreciation and amortization. Equity earnings from Chandler. $ (640,000) 255,000 (126,000) 150,000 (199,000) $ (587,000) 203,000 -0- 151,000 -0- Net income $ (560,000) $(233,000) Statement of Retained Earnings Retained earnings, 1/1. Net income (above) Dividends declared. $(1,835,000) (560,000) 100,000 $ (805,000) (233,000) 40,000 Retained earnings, 12/31 $(2,295,000) $(998,000) Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment. $343,000 1,468,000 134,000 395,000 693,000 $ 432,000 -0- 221,000 410,000 341,000 $ 3,033,000 $ (203,000) (535,000) (2,295,000) $ 1,404,000 $ (106,000) (300,000) (998,000) Total assets Liabilities Common stock Retained earnings, 12/31. Total liabilities and equity. $(3,033,000) $(1,404,000)

33. On January 1, 2015, Brooks Corporation exchanged $1,183,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandier hau a book value equal to $1,105,000. Chandler's individual assets and liabilities had fair values equal to their respective book values excent for the patented technology account, which was undervalued by S204,000 with an estimated remaining life of 6 years. The Chandler acquisi- tion was Brooks's only business combination for the year. In case expected synergies did not materialize Brooks Corporation wished to prepare lor a potential future spin-off of Chandler Inc. Therefore Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing valde. On December 31, 2015, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Parentheses indicated credit balances. Brooks Chandler Inc. Corp. Income Statement Revenues Cost of goods sold. Gain on bargain purchase Depreciation and amortization. Equity earnings from Chandler. $ (640,000) 255,000 (126,000) 150,000 (199,000) $ (587,000) 203,000 -0- 151,000 -0- Net income $ (560,000) $(233,000) Statement of Retained Earnings Retained earnings, 1/1. Net income (above) Dividends declared. $(1,835,000) (560,000) 100,000 $ (805,000) (233,000) 40,000 Retained earnings, 12/31 $(2,295,000) $(998,000) Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment. $343,000 1,468,000 134,000 395,000 693,000 $ 432,000 -0- 221,000 410,000 341,000 $ 3,033,000 $ (203,000) (535,000) (2,295,000) $ 1,404,000 $ (106,000) (300,000) (998,000) Total assets Liabilities Common stock Retained earnings, 12/31. Total liabilities and equity. $(3,033,000) $(1,404,000)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had 33. On January 1, 2015, Brooks Corporation exchanged $1,183,000 fair-value consideration for a book value equal to $1,105,000. Chandler's individual assets and liabilities had fair values undervalued by S204,000 with an estimated remaining life of 6 years. The Chandler acquisi- equal to their respective book values excent for the patented technology account, which was tion was Brooks's only business combination for the year. In case expected synergies did not materialize Brooks Corporation wished to prepare loi a potential future spin-off of Chandler Inc Therefore Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing valde. On December 31, 2015, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Parentheses indicated credit balances. Brooks Chandler Inc. Corp. Income Statement Revenues Cost of goods sold. Gain on bargain purchase Depreciation and amortization. Equity earnings from Chandler. $(640,000) 255,000 (126,000) 150,000 (199,000) $ (587,000) 203,000 -0- 151,000 -0- Net income $ (560,000) $(233,000) Statement of Retained Earnings Retained earnings, 1/1. Net income (above) Dividends declared. $(1,835,000) (560,000) 100,000 $ (805,000) (233,000) 40,000 Retained earnings, 12/31 $(2,295,000) $ (998,000) Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment. $ 343,000 1,468,000 134,000 395,000 693,000 $ 432,000 -0- 221,000 410,000 341,000 $ 3,033,000 $ (203,000) (535,000) (2,295,000) $ 1,404,000 $ (106,000) (300,000) (998,000) $(1,404,000) Total assets Liabilities Common stock Retained earnings, 12/31. Total liabilities and equity. $(3,033,000) 4. Show how Brooks determined the following account balances: Gain on bargain purchase. Earnings from Chandler. Investment in Chandler. h Prepare a December 31, 2015, consolidated worksheet for Brooks and Chandlar nnid $465 000 cash for all of the outstanding common
Transcribed Image Text:all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had 33. On January 1, 2015, Brooks Corporation exchanged $1,183,000 fair-value consideration for a book value equal to $1,105,000. Chandler's individual assets and liabilities had fair values undervalued by S204,000 with an estimated remaining life of 6 years. The Chandler acquisi- equal to their respective book values excent for the patented technology account, which was tion was Brooks's only business combination for the year. In case expected synergies did not materialize Brooks Corporation wished to prepare loi a potential future spin-off of Chandler Inc Therefore Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing valde. On December 31, 2015, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Parentheses indicated credit balances. Brooks Chandler Inc. Corp. Income Statement Revenues Cost of goods sold. Gain on bargain purchase Depreciation and amortization. Equity earnings from Chandler. $(640,000) 255,000 (126,000) 150,000 (199,000) $ (587,000) 203,000 -0- 151,000 -0- Net income $ (560,000) $(233,000) Statement of Retained Earnings Retained earnings, 1/1. Net income (above) Dividends declared. $(1,835,000) (560,000) 100,000 $ (805,000) (233,000) 40,000 Retained earnings, 12/31 $(2,295,000) $ (998,000) Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment. $ 343,000 1,468,000 134,000 395,000 693,000 $ 432,000 -0- 221,000 410,000 341,000 $ 3,033,000 $ (203,000) (535,000) (2,295,000) $ 1,404,000 $ (106,000) (300,000) (998,000) $(1,404,000) Total assets Liabilities Common stock Retained earnings, 12/31. Total liabilities and equity. $(3,033,000) 4. Show how Brooks determined the following account balances: Gain on bargain purchase. Earnings from Chandler. Investment in Chandler. h Prepare a December 31, 2015, consolidated worksheet for Brooks and Chandlar nnid $465 000 cash for all of the outstanding common
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