Brooks Corp. Chandler Inc. Income Statement $ (640,000) 255,000 (126,000) 150,000 Revenues.. $ (587,000) Cost of goods sold Gain on bargain purchase. Depreciation and amortization. Equity earnings from Chandler. Net income.... 203,000 -0- 151,000 (199,000) $ (560,000) -0- $ (233,000) Statement of Retained Earnings Retained earnings, 1/1.... Net income (above) . Dividends declared.. Retained earnings, 12/31 $(1,835,000) (560,000) 100,000 $(2,295,000) $ (805,000) (233,000) 40,000 $ (998,000) Balance Sheet Current assets.. $ 343,000 1,468,000 134,000 $ 432,000 -0- Investment in Chandler Trademarks..... Patented technology Equipment 221,000 395,000 410,000 693,000 $ 3,033,000 341,000 $ 1,404,000 Total assets $ (203,000) (535,000) (2,295,000) $(3,033,000) $ (106,000) (300,000) (998,000) $(1,404,000) Liabilities.. Common stock Retained earnings, 12/31 Total liabilities and equity
Brooks Corp. Chandler Inc. Income Statement $ (640,000) 255,000 (126,000) 150,000 Revenues.. $ (587,000) Cost of goods sold Gain on bargain purchase. Depreciation and amortization. Equity earnings from Chandler. Net income.... 203,000 -0- 151,000 (199,000) $ (560,000) -0- $ (233,000) Statement of Retained Earnings Retained earnings, 1/1.... Net income (above) . Dividends declared.. Retained earnings, 12/31 $(1,835,000) (560,000) 100,000 $(2,295,000) $ (805,000) (233,000) 40,000 $ (998,000) Balance Sheet Current assets.. $ 343,000 1,468,000 134,000 $ 432,000 -0- Investment in Chandler Trademarks..... Patented technology Equipment 221,000 395,000 410,000 693,000 $ 3,033,000 341,000 $ 1,404,000 Total assets $ (203,000) (535,000) (2,295,000) $(3,033,000) $ (106,000) (300,000) (998,000) $(1,404,000) Liabilities.. Common stock Retained earnings, 12/31 Total liabilities and equity
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
On January 1, 2018, Brooks Corporation exchanged $1,183,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,105,000. 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 $204,000 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, Inc. 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. Parentheses indicated credit balances.
a. Show how Brooks determined 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.
Transcribed Image Text:Brooks Corp.
Chandler Inc.
Income Statement
$ (640,000)
255,000
(126,000)
150,000
Revenues..
$ (587,000)
Cost of goods sold
Gain on bargain purchase.
Depreciation and amortization.
Equity earnings from Chandler.
Net income....
203,000
-0-
151,000
(199,000)
$ (560,000)
-0-
$ (233,000)
Statement of Retained Earnings
Retained earnings, 1/1....
Net income (above) .
Dividends declared..
Retained earnings, 12/31
$(1,835,000)
(560,000)
100,000
$(2,295,000)
$ (805,000)
(233,000)
40,000
$ (998,000)
Balance Sheet
Current assets..
$ 343,000
1,468,000
134,000
$ 432,000
-0-
Investment in Chandler
Trademarks.....
Patented technology
Equipment
221,000
395,000
410,000
693,000
$ 3,033,000
341,000
$ 1,404,000
Total assets
$ (203,000)
(535,000)
(2,295,000)
$(3,033,000)
$ (106,000)
(300,000)
(998,000)
$(1,404,000)
Liabilities..
Common stock
Retained earnings, 12/31
Total liabilities and equity
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education