On January 1, 2021, Brooks Corporation exchanged $1,179,500 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,027,500. 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 $300,000 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, 2021, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Brooks Corp. Chandler Inc. Income Statement Revenues $ (672,000 ) $ (653,000 ) Cost of goods sold 236,000 225,000 Gain on bargain purchase (148,000 ) 0 Depreciation and amortization 142,000 150,000 Equity earnings from Chandler (228,000 ) 0 Net income $ (670,000 ) $ (278,000 ) Statement of Retained Earnings Retained earnings, 1/1 $ (1,745,000 ) $ (727,500 ) Net income (above) (670,000 ) (278,000 ) Dividends declared 100,000 40,000 Retained earnings, 12/31 $ (2,315,000 ) $ (965,500 ) Balance Sheet Current assets $ 396,500 $ 441,500 Investment in Chandler 1,515,500 0 Trademarks 119,000 207,000 Patented technology 392,000 444,000 Equipment 638,000 316,000 Total assets $ 3,061,000 $ 1,408,500 Liabilities $ (211,000 ) $ (143,000 ) Common stock (535,000 ) (300,000 ) Retained earnings, 12/31 (2,315,000 ) (965,500 ) Total liabilities and equity $ (3,061,000 ) $ (1,408,500 ) Note: Parentheses indicate a credit balance. a. Determine the following account balances: Gain on bargain purchase. Earnings from Chandler. Investment in Chandler.

On January 1, 2021, Brooks Corporation exchanged $1,179,500 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,027,500. 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 $300,000 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, 2021, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Brooks Corp. Chandler Inc. Income Statement Revenues $ (672,000 ) $ (653,000 ) Cost of goods sold 236,000 225,000 Gain on bargain purchase (148,000 ) 0 Depreciation and amortization 142,000 150,000 Equity earnings from Chandler (228,000 ) 0 Net income $ (670,000 ) $ (278,000 ) Statement of Retained Earnings Retained earnings, 1/1 $ (1,745,000 ) $ (727,500 ) Net income (above) (670,000 ) (278,000 ) Dividends declared 100,000 40,000 Retained earnings, 12/31 $ (2,315,000 ) $ (965,500 ) Balance Sheet Current assets $ 396,500 $ 441,500 Investment in Chandler 1,515,500 0 Trademarks 119,000 207,000 Patented technology 392,000 444,000 Equipment 638,000 316,000 Total assets $ 3,061,000 $ 1,408,500 Liabilities $ (211,000 ) $ (143,000 ) Common stock (535,000 ) (300,000 ) Retained earnings, 12/31 (2,315,000 ) (965,500 ) Total liabilities and equity $ (3,061,000 ) $ (1,408,500 ) Note: Parentheses indicate a credit balance. a. Determine the following account balances: Gain on bargain purchase. Earnings from Chandler. Investment in Chandler.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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, 2021, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period.

	Brooks Corp.		Chandler Inc.
Income Statement
Revenues	$	(672,000	)	$	(653,000	)
Cost of goods sold		236,000			225,000
Gain on bargain purchase		(148,000	)		0
Depreciation and amortization		142,000			150,000
Equity earnings from Chandler		(228,000	)		0
Net income	$	(670,000	)	$	(278,000	)
Statement of Retained Earnings
Retained earnings, 1/1	$	(1,745,000	)	$	(727,500	)
Net income (above)		(670,000	)		(278,000	)
Dividends declared		100,000			40,000
Retained earnings, 12/31	$	(2,315,000	)	$	(965,500	)
Balance Sheet
Current assets	$	396,500		$	441,500
Investment in Chandler		1,515,500			0
Trademarks		119,000			207,000
Patented technology		392,000			444,000
Equipment		638,000			316,000
Total assets	$	3,061,000		$	1,408,500
Liabilities	$	(211,000	)	$	(143,000	)
Common stock		(535,000	)		(300,000	)
Retained earnings, 12/31		(2,315,000	)		(965,500	)
Total liabilities and equity	$	(3,061,000	)	$	(1,408,500	)

Note: Parentheses indicate a credit balance.

a. Determine the following account balances:

Gain on bargain purchase.
Earnings from Chandler.
Investment in Chandler.

b. Prepare a December 31, 2021, consolidated worksheet for Brooks and Chandler.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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