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a. Determine the following account balances: Gain on bargain purchase. Earnings from Chandler • Investment in Chandler.

a. Determine the following account balances: Gain on bargain purchase. Earnings from Chandler • Investment in Chandler.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2024, Brooks Corporation exchanged $1,234,500 fair-value consideration for all of the outstanding voting stock of Chandler, Incorporated. 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, Incorporated. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2024, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings from Chandler Net income Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 Balance Sheet Current assets Accounts Investment in Chandler Trademarks Patented technology Equipment Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity Note: Parentheses indicate a credit balance. Required: a. Determine the following account balances: • Gain on bargain purchase. Earnings from Chandler. • Investment in Chandler. Required A Required B Brooks Corporation $ (497,500) 209,000 Determine the following account balances: Note: Input all amounts as positive values. (180,000) 146,000 (200,000) $ (522,500) Accounts $ (1,885,000) (522,500) 200,000 $ (2,207,500) Complete this question by entering your answers in the tabs below. $ 233,000 1,564,500 133,000 379,000 670,000 $ 2,979,500 $ (237,000) (535,000) (2,207,500) $ (2,979,500) b. Prepare a December 31, 2024, consolidated worksheet for Brooks and Chandler. Chandler Incorporated Amounts $ (586,000) 177,000 0 157,000 0 $ (252,000) $ (802,500) (252,000) 50,000 $ (1,004,500) $ 490,500 0 257,000 419,000 337,000 $ 1,503,500 $ (199,000) (300,000) (1,004,500) $ (1,503,500) 0 Complete this question by entering your answers in the tabs below. Required A Required B Prepare a December 31, 2024, consolidated worksheet for Brooks and Chandler. Note: For accounts where multiple consolidation 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. Input all amounts as positive values. Accounts Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings in Chandler Net income Statement of Retained Earnings Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity BROOKS AND CHANDLER Consolidation Worksheet For Year Ending December 31, 2024 Brooks Chandler $ (497,500) $ (586,000) 209,000 (180,000) 146,000 (200,000) 177,000 0 157,000 0 $ (522,500) $ (252,000) $(1,885,000) $ (802,500) (522,500) (252,000) 200,000 50,000 $(2,207,500) $(1,004,500) $ 233,000 $ 1,564,500 490,500 0 257,000 133,000 379,000 670,000 419,000 337,000 $ 2,979,500 $ 1,503,500 $ (237,000) $ (199,000) (535,000) (300,000) (2,207,500) (1,004,500) $(2,979,500) $(1,503,500) $ < Required A Consolidation Entries Credit Debit 0 $ Required B > 0 Consolidated Totals Show less A 100%
Transcribed Image Text:On January 1, 2024, Brooks Corporation exchanged $1,234,500 fair-value consideration for all of the outstanding voting stock of Chandler, Incorporated. 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, Incorporated. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2024, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings from Chandler Net income Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 Balance Sheet Current assets Accounts Investment in Chandler Trademarks Patented technology Equipment Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity Note: Parentheses indicate a credit balance. Required: a. Determine the following account balances: • Gain on bargain purchase. Earnings from Chandler. • Investment in Chandler. Required A Required B Brooks Corporation $ (497,500) 209,000 Determine the following account balances: Note: Input all amounts as positive values. (180,000) 146,000 (200,000) $ (522,500) Accounts $ (1,885,000) (522,500) 200,000 $ (2,207,500) Complete this question by entering your answers in the tabs below. $ 233,000 1,564,500 133,000 379,000 670,000 $ 2,979,500 $ (237,000) (535,000) (2,207,500) $ (2,979,500) b. Prepare a December 31, 2024, consolidated worksheet for Brooks and Chandler. Chandler Incorporated Amounts $ (586,000) 177,000 0 157,000 0 $ (252,000) $ (802,500) (252,000) 50,000 $ (1,004,500) $ 490,500 0 257,000 419,000 337,000 $ 1,503,500 $ (199,000) (300,000) (1,004,500) $ (1,503,500) 0 Complete this question by entering your answers in the tabs below. Required A Required B Prepare a December 31, 2024, consolidated worksheet for Brooks and Chandler. Note: For accounts where multiple consolidation 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. Input all amounts as positive values. Accounts Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings in Chandler Net income Statement of Retained Earnings Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity BROOKS AND CHANDLER Consolidation Worksheet For Year Ending December 31, 2024 Brooks Chandler $ (497,500) $ (586,000) 209,000 (180,000) 146,000 (200,000) 177,000 0 157,000 0 $ (522,500) $ (252,000) $(1,885,000) $ (802,500) (522,500) (252,000) 200,000 50,000 $(2,207,500) $(1,004,500) $ 233,000 $ 1,564,500 490,500 0 257,000 133,000 379,000 670,000 419,000 337,000 $ 2,979,500 $ 1,503,500 $ (237,000) $ (199,000) (535,000) (300,000) (2,207,500) (1,004,500) $(2,979,500) $(1,503,500) $ < Required A Consolidation Entries Credit Debit 0 $ Required B > 0 Consolidated Totals Show less A 100%
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