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on January 1, 2020, Innovus, Inc., acquired 100 percent of the common stock of Chip Tech Company for $670,000 in cash and air-value consideration. Chip Tech's fair value was allocated among its net assets as follows: $670,000 Fair value of consideration transferred for ChipTech Book value of Chip Tech: Common stock and Additional Paid-In Capital (APIC) $130,000 370,000 500,000 Retained earnings Excess fair value over book value to 170,000 Trademark (10-year remaining life) $ 40,000 80,000 120,000 Existing technology (5-year remaining life) $ 50,000 Goodwill The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date): ChinTech

on January 1, 2020, Innovus, Inc., acquired 100 percent of the common stock of Chip Tech Company for $670,000 in cash and air-value consideration. Chip Tech's fair value was allocated among its net assets as follows: $670,000 Fair value of consideration transferred for ChipTech Book value of Chip Tech: Common stock and Additional Paid-In Capital (APIC) $130,000 370,000 500,000 Retained earnings Excess fair value over book value to 170,000 Trademark (10-year remaining life) $ 40,000 80,000 120,000 Existing technology (5-year remaining life) $ 50,000 Goodwill The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date): ChinTech

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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Compute the consolidated balances for Innovus and ChipTech by completing the provided worksheet.
**Week 4** **On January 1, 2020, Innovus, Inc. acquired 100 percent of the common stock of ChipTech Company for $670,000 in cash and other fair-value consideration. ChipTech's fair value was allocated among its net assets as follows:** **Fair value of consideration transferred for ChipTech** - $670,000 **Book value of ChipTech:** - Common stock and Additional Paid-In Capital (APIC): $130,000 - Retained earnings: $370,000 - Excess fair value over book value to: $500,000 - Trademark (10-year remaining life): $40,000 - Existing technology (5-year remaining life): $80,000 - Goodwill: $120,000 - Total: $170,000 + $330,000 = $500,000 **The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date):** **| Account | Innovus | ChipTech |** **|---------|---------|----------|** | Revenues | $ (960,000) | $(240,000) | | Cost of goods sold | 590,000 | 90,000 | | Depreciation expense | 100,000 | 30,000 | | Amortization expense | 8,000 | - | | Dividend income | (12,000) | - | | Interest Expense | 75,000 | 15,000 | | Income (960,000) | (240,000) | | Retained earnings 1/1/21 | $ (1,575,000) | $ (450,000) | | Net income | (207,000) | (57,000) | | Dividends declared | 12,000 | 5,000 | | Retained earnings 12/31/21 | $ (1,610,000) | $ (485,000) | | Cash | 96,000 | 35,000 | | Current Items | $280,000 | 120,000 | | Investment in ChipTech | $685,000 | - | | Trademark | 32,000 | - | | Equipment | 400,000 | 225,000 | | Technology | 48,000 | - | | Goodwill |
Transcribed Image Text:**Week 4** **On January 1, 2020, Innovus, Inc. acquired 100 percent of the common stock of ChipTech Company for $670,000 in cash and other fair-value consideration. ChipTech's fair value was allocated among its net assets as follows:** **Fair value of consideration transferred for ChipTech** - $670,000 **Book value of ChipTech:** - Common stock and Additional Paid-In Capital (APIC): $130,000 - Retained earnings: $370,000 - Excess fair value over book value to: $500,000 - Trademark (10-year remaining life): $40,000 - Existing technology (5-year remaining life): $80,000 - Goodwill: $120,000 - Total: $170,000 + $330,000 = $500,000 **The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date):** **| Account | Innovus | ChipTech |** **|---------|---------|----------|** | Revenues | $ (960,000) | $(240,000) | | Cost of goods sold | 590,000 | 90,000 | | Depreciation expense | 100,000 | 30,000 | | Amortization expense | 8,000 | - | | Dividend income | (12,000) | - | | Interest Expense | 75,000 | 15,000 | | Income (960,000) | (240,000) | | Retained earnings 1/1/21 | $ (1,575,000) | $ (450,000) | | Net income | (207,000) | (57,000) | | Dividends declared | 12,000 | 5,000 | | Retained earnings 12/31/21 | $ (1,610,000) | $ (485,000) | | Cash | 96,000 | 35,000 | | Current Items | $280,000 | 120,000 | | Investment in ChipTech | $685,000 | - | | Trademark | 32,000 | - | | Equipment | 400,000 | 225,000 | | Technology | 48,000 | - | | Goodwill |
## Financial Consolidation Statement This document represents a financial consolidation statement for two companies, Innovus and ChipTech. The consolidation entries and the resulting consolidated financials are provided to present a unified overview of their financial status. Below is a detailed breakdown: ### Income Statement **Innovus** 1. **Revenues**: $(990,000) 2. **Cost of Goods Sold**: $500,000 3. **Depreciation Expense**: $100,000 4. **Amortization Expense**: $55,000 5. **Dividend Income**: $(40,000) 6. **Net Income**: $(375,000) **ChipTech** 1. **Revenues**: $(210,000) 2. **Cost of Goods Sold**: $90,000 3. **Depreciation Expense**: $5,000 4. **Amortization Expense**: $18,000 5. **Net Income**: $(97,000) ### Retained Earnings **Innovus** 1. **Retained Earnings 1/1**: $(1,555,000) 2. **Net Income**: $(375,000) 3. **Dividends Declared**: $250,000 4. **Retained Earnings 12/31**: $(1,680,000) **ChipTech** 1. **Retained Earnings 1/1**: $(450,000) 2. **Net Income**: $(97,000) 3. **Dividends Declared**: $40,000 4. **Retained Earnings 12/31**: $(507,000) ### Balance Sheet **Assets** 1. **Current Assets**: - Innovus: $960,000 - ChipTech: $355,000 2. **Investment in ChipTech**: - Innovus: $670,000 3. **Equipment (Net)**: - Innovus: $765,000 - ChipTech: $225,000 4. **Trademark**: - Innovus: $235,000 - ChipTech: $100,000 5. **Existing Technology**: - ChipTech: $45,000 6. **Goodwill**: - Innovus: $450,000 **Total Assets**: - Innovus: $3,080,
Transcribed Image Text:## Financial Consolidation Statement This document represents a financial consolidation statement for two companies, Innovus and ChipTech. The consolidation entries and the resulting consolidated financials are provided to present a unified overview of their financial status. Below is a detailed breakdown: ### Income Statement **Innovus** 1. **Revenues**: $(990,000) 2. **Cost of Goods Sold**: $500,000 3. **Depreciation Expense**: $100,000 4. **Amortization Expense**: $55,000 5. **Dividend Income**: $(40,000) 6. **Net Income**: $(375,000) **ChipTech** 1. **Revenues**: $(210,000) 2. **Cost of Goods Sold**: $90,000 3. **Depreciation Expense**: $5,000 4. **Amortization Expense**: $18,000 5. **Net Income**: $(97,000) ### Retained Earnings **Innovus** 1. **Retained Earnings 1/1**: $(1,555,000) 2. **Net Income**: $(375,000) 3. **Dividends Declared**: $250,000 4. **Retained Earnings 12/31**: $(1,680,000) **ChipTech** 1. **Retained Earnings 1/1**: $(450,000) 2. **Net Income**: $(97,000) 3. **Dividends Declared**: $40,000 4. **Retained Earnings 12/31**: $(507,000) ### Balance Sheet **Assets** 1. **Current Assets**: - Innovus: $960,000 - ChipTech: $355,000 2. **Investment in ChipTech**: - Innovus: $670,000 3. **Equipment (Net)**: - Innovus: $765,000 - ChipTech: $225,000 4. **Trademark**: - Innovus: $235,000 - ChipTech: $100,000 5. **Existing Technology**: - ChipTech: $45,000 6. **Goodwill**: - Innovus: $450,000 **Total Assets**: - Innovus: $3,080,
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