On January 1, 2024, Brooks Corporation exchanged $1,194,000 fair-value consideration for all of the outstanding voting stock of Chandler, Incorporated. At the acquisition date, Chandler had a book value equal to $1,150,000. 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 $216,000 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. Accounts Brooks Corporation Chandler Incorporated Income Statement Revenues $ (697,500) $ (669,000) Cost of goods sold 263,000 209,000 Gain on bargain purchase (172,000) 0 Depreciation and amortization 134,000 174,000 Equity earnings from Chandler (250,000) 0 Net income $ (722,500) $ (286,000) Statement of Retained Earnings Retained earnings, 1/1 $ (1,900,000) $ (850,000) Net income (above) (722,500) (286,000) Dividends declared 250,000 30,000 Retained earnings, 12/31 $ (2,372,500) $ (1,106,000) Balance Sheet Current assets $ 433,500 $ 440,000 Investment in Chandler 1,586,000 0 Trademarks 111,000 258,000 Patented technology 325,000 491,000 Equipment 648,000 380,000 Total assets $ 3,103,500 $ 1,569,000 Liabilities $ (196,000) $ (163,000) Common stock (535,000) (300,000) Retained earnings, 12/31 (2,372,500) (1,106,000) Total liabilities and equity $ (3,103,500) $ (1,569,000) Determine the following account balances: Gain on bargain purchase. Earnings from Chandler. Investment in Chandler.

On January 1, 2024, Brooks Corporation exchanged $1,194,000 fair-value consideration for all of the outstanding voting stock of Chandler, Incorporated. At the acquisition date, Chandler had a book value equal to $1,150,000. 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 $216,000 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. Accounts Brooks Corporation Chandler Incorporated Income Statement Revenues $ (697,500) $ (669,000) Cost of goods sold 263,000 209,000 Gain on bargain purchase (172,000) 0 Depreciation and amortization 134,000 174,000 Equity earnings from Chandler (250,000) 0 Net income $ (722,500) $ (286,000) Statement of Retained Earnings Retained earnings, 1/1 $ (1,900,000) $ (850,000) Net income (above) (722,500) (286,000) Dividends declared 250,000 30,000 Retained earnings, 12/31 $ (2,372,500) $ (1,106,000) Balance Sheet Current assets $ 433,500 $ 440,000 Investment in Chandler 1,586,000 0 Trademarks 111,000 258,000 Patented technology 325,000 491,000 Equipment 648,000 380,000 Total assets $ 3,103,500 $ 1,569,000 Liabilities $ (196,000) $ (163,000) Common stock (535,000) (300,000) Retained earnings, 12/31 (2,372,500) (1,106,000) Total liabilities and equity $ (3,103,500) $ (1,569,000) Determine the following account balances: Gain on bargain purchase. Earnings from Chandler. Investment in Chandler.

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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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.

Accounts	Brooks Corporation	Chandler Incorporated
Income Statement
Revenues	$ (697,500)	$ (669,000)
Cost of goods sold	263,000	209,000
Gain on bargain purchase	(172,000)	0
Depreciation and amortization	134,000	174,000
Equity earnings from Chandler	(250,000)	0
Net income	$ (722,500)	$ (286,000)
Statement of Retained Earnings
Retained earnings, 1/1	$ (1,900,000)	$ (850,000)
Net income (above)	(722,500)	(286,000)
Dividends declared	250,000	30,000
Retained earnings, 12/31	$ (2,372,500)	$ (1,106,000)
Balance Sheet
Current assets	$ 433,500	$ 440,000
Investment in Chandler	1,586,000	0
Trademarks	111,000	258,000
Patented technology	325,000	491,000
Equipment	648,000	380,000
Total assets	$ 3,103,500	$ 1,569,000
Liabilities	$ (196,000)	$ (163,000)
Common stock	(535,000)	(300,000)
Retained earnings, 12/31	(2,372,500)	(1,106,000)
Total liabilities and equity	$ (3,103,500)	$ (1,569,000)

Determine the following account balances:

Gain on bargain purchase.

Earnings from Chandler.

Investment in 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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