Question
On January 1, 2020, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite...
On January 1, 2020, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $2,007,750 cash. On the acquisition date, GaugeRite had the following balance sheet:
| Cash | $ | 87,000 | Accounts payable | $ | 196,000 | |
| Accounts receivable | 176,000 | Long-term debt | 993,000 | |||
| Land | 738,000 | Common stock | 1,009,000 | |||
| Equipment (net) | 1,898,000 | Retained earnings | 701,000 | |||
| Total assets | $ | 2,899,000 | Total liabilities and equity | $ | 2,899,000 | |
At the acquisition date, the following allocation was prepared:
| Fair value of consideration transferred | $ | 2,007,750 | |||
| Book value acquired | 1,710,000 | ||||
| Excess fair value over book value | 297,750 | ||||
| To in-process research and development | $ | 53,750 | |||
| To equipment (8-year remaining life) | 124,000 | 177,750 | |||
| To goodwill (indefinite life) | $ | 120,000 | |||
Although at acquisition date Procise had expected $53,750 in future benefits from GaugeRite’s in-process research and development project, by the end of 2020 it was apparent that the research project was a failure with no future economic benefits.
On December 31, 2021, Procise and GaugeRite submitted the following financial statements for consolidation. There were no intra-entity payables on that date.
| Procise | GaugeRite | ||||||
| Sales | $ | (3,538,500 | ) | $ | (1,139,500 | ) | |
| Cost of goods sold | 1,690,000 | 675,000 | |||||
| Depreciation expense | 324,000 | 148,000 | |||||
| Other operating expenses | 216,500 | 36,500 | |||||
| Subsidiary income | (264,500 | ) | 0 | ||||
| Net income | $ | (1,572,500 | ) | $ | (280,000 | ) | |
| Retained earnings 1/1/21 | $ | (3,100,000 | ) | $ | (888,000 | ) | |
| Net income | (1,572,500 | ) | (280,000 | ) | |||
| Dividends declared | 200,000 | 25,225 | |||||
| Retained earnings 12/31/21 | $ | (4,472,500 | ) | $ | (1,142,775 | ) | |
| Cash | $ | 7,725 | $ | 29,775 | |||
| Accounts receivable | 842,000 | 183,000 | |||||
| Inventory | 962,000 | 510,000 | |||||
| Investment in GaugeRite | 2,364,775 | 0 | |||||
| Land | 3,457,500 | 756,000 | |||||
| Equipment (net) | 5,005,000 | 1,945,000 | |||||
| Goodwill | 371,000 | 0 | |||||
| Total assets | $ | 13,010,000 | $ | 3,423,775 | |||
| Accounts payable | $ | (285,000 | ) | $ | (431,000 | ) | |
| Long-term debt | (3,102,500 | ) | (841,000 | ) | |||
| Common stock | (5,150,000 | ) | (1,009,000 | ) | |||
| Retained earnings 12/31/21 | (4,472,500 | ) | (1,142,775 | ) | |||
| Total liabilities and equity | $ | (13,010,000 | ) | $ | (3,423,775 | ) | |
-
Show how Procise derived its December 31, 2021, Investment in GaugeRite account balance.
-
Prepare a consolidated worksheet for Procise and GaugeRite as of December 31, 2021.
Amounts Consideration transferred 1/1/20 Investment balance 12/31/21
Consolidation Entries Accounts Debit Credit Consolidated Totals Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income Net Income 12/31/21 12/31/21 Procise Gauge Rite $ (3,538.500) $ (1,139,500) 1.690.000 675.000 324,000 148,000 216.500 36,500 (264,500) 0 $ (1,572,500) S 280.000 Retained earnings 1/1/21 Net Income Dividends declared Retained earnings 12/31/21 $ (3,100,000) (1,572.500) 200,000 $ (4.472.500) s (888,000) (280.000) 25,225 $ (1.142.775) Cash $ s 7.725 842.000 29.775 183,000 510,000 Accounts receivable Inventory Investment in GaugeRite Land Equipment (net) Goodwill 962,000 2.364.775 3,457,500 0 756,000 1.945,000 5.005.000 0 371,000 $ 13,010,000 Total assets $ 3.423,775 $ 14,282,000 S S (285.000) (3.102.500) (5.150.000) (431.000) (841.000) Accounts payable Long-term debt Common stock-Procise Common stock-GaugeRite Retained earnings 12/31/21 Total liabilities and equity (4.472.500) $(13.010.000) (1,009.000) (1.142.775) $ (3,423,775) $ 14,282,000
Answers
Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. a. Procise 1/1/20 Investment in GaugeRite account balance Consideration transferred 1/1/20 Increase in GaugeRite's RE to 1/1/21 In-process R&D write-off in 2020 Amortizations 2020 Income 2021 Dividends declared in 2021 Amortization 2018 Investment balance 12/31/21 $ 2,007,750 187,000 888000-701000 (53,750) (15,500) 124000/8 Years 280,000 (25,225) (15,500) 124000/8 Years $ 2,364.775 Part c. Consolidated Worksheet Consolidated Entries Debit Credit Accounts Sales Cost of goods sold Deprecation expense Other operating expenses Subsidiary income Net income 12-31-21 Procise (3.538.500) 1.690.000 324.000 216,500 (264,500) (1.572,500) 12-31-21 GaugeRite (1.139,500) 675,000 148,000 [E] 36,500 [I] (280,000) Consolidated (4.678,000) 2,365,000 487,500 253,000 15,500 264,500 (1,572,500) 888.000 Retained earnings 1/1/21 Net income Dividends declared Retained earnings 12/31/21 (3.100.000) (1,572,500) 200,000 (4,472,500) (888,000) [S] (280,000) 25.225 (1,142,775) (3.100,000) (1,572,500) 200.000 (4.472,500) [D] 25.225 Cash Accounts receivable Inventory Investment in GaugeRite 7,725 842,000 962,000 2,364,775 29.775 183,000 510,000 37,500 1,025,000 1,472,000 [D] 25,225 [S] [A] [I] 228,500 264,500 15,500 Land Equipment (net) Goodwill Total assets 3,457,500 5,005,000 371,000 13.010,000 756,000 1.945,000 [A] [A] 3,423,775 108,500 [E] 120,000 4.213,500 7,043,000 491,000 14,282,000 (285,000) (3,102,500) (5,150,000) (431,000) (841,000) (716,000) (3.943,500) (5.150,000) Accounts payable Long-term debt Common stock - Procise Common stock - GaugeRite Retained earnings. 12/31/21 Total liabilities and equity (4.472,500) (1,009,000) [S] (1,142,775) (3.423.775) (4,472,500) 2.430.725 (14,282,000) 2,430.725
Similar Solved Questions
1 answers
Describe the difference between profit and cash. What are the differences between cash from operating activities,...
Describe the difference between profit and cash. What are the differences between cash from operating activities, cash from investing activities, and cash from financing activities?...
1 answers
(12. Why should you NEVER place a dropper (even a presumed brand new, never been used...
(12. Why should you NEVER place a dropper (even a presumed brand new, never been used dropper) directly into a reagent bottle? des te drepor might dentain some chemicals which might act as an impurity or it can also interact w/ the other Chemicals we need to wash the dropper properly & shy it th...
1 answers
Notice this is a multiple answers question. Suppose there are two very similar countries (call them...
Notice this is a multiple answers question. Suppose there are two very similar countries (call them E and F). Both countries have the same population and neither is experiencing population growth (that is, N is identical and constant in both countries). Both countries depreciate capital at the same ...
1 answers
Identify health promotion activities practiced in a pediatric psychiatric institution
Identify health promotion activities practiced in a pediatric psychiatric institution...
1 answers
You are a shareholder in a C corporation. The corporation earns $2.27 per share before taxes....
You are a shareholder in a C corporation. The corporation earns $2.27 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a are paid? dindend Assume the corporate tax rate is 38% and the personal tax rate on both dividend and non-dividend income is 20...
1 answers
Sadiq the doorman earned £3470 in tips last year This year his tips dropped by £590. How much did he earn in tips this year?
Sadiq the doorman earned £3470 in tips last year This year his tips dropped by £590. How much did he earn in tips this year?...
1 answers
Bluegill Company sells 11,500 units at $360 per unit. Fixed costs are $207,000 and income from...
Bluegill Company sells 11,500 units at $360 per unit. Fixed costs are $207,000 and income from operations is $2,691,000. Determine the following: Round the contribution margin ratio to two decimal places a. Variable cost per unit b. Unit contribution margin per unit c. Contribution margin ratio tA...
1 answers
Option #1: Variance Analysis and Benchmarking Your supervisor has asked you to prepare some calculations based...
Option #1: Variance Analysis and Benchmarking Your supervisor has asked you to prepare some calculations based on the company's data and then research publicly available similar competitor information to see how your company is performing within the industry. Your company, Carrylt Inc., produces...
1 answers
Based on your research and what you have learned in this module, list 2 job titles...
Based on your research and what you have learned in this module, list 2 job titles of interest within your career field, and what you have identified as a starting average salary for each of these positions. List 2 resources that you used to research salary information, and also discuss a salary ran...
1 answers
The blood platelet counts of a group of women have a bell shaped distribution with a...
The blood platelet counts of a group of women have a bell shaped distribution with a mean of 249.7 and a standard deviation of 66 2. (Al units are 1000 cellsUsing the empirical rule, find each approximate percentage below a. What is the approximate percentage of women with platelet counts within 1 s...
1 answers
A. Enough of a monoprotic acid is dissolved in water to produce a 0.0163 M solution....
a. Enough of a monoprotic acid is dissolved in water to produce a 0.0163 M solution. The pH of the resulting solution is 2.51. Calculate the Ka for the acid. Ka= ________ It's not 5.86 10-4. I tried it and it wasn't correct. b. The Ka of a monoprotic weak acid is 6.61 × 10-3. What is ...
1 answers
Identify limiting reagents Question If 4.0 mol aluminum and 7.0 mol hydrogen bromide react according to...
Identify limiting reagents Question If 4.0 mol aluminum and 7.0 mol hydrogen bromide react according to the following equation, how many moles of hydrogen are formed and what is the limiting reactant? 2A1 + 6HBr - 2A1Br + 3H Select the correct answer below: O 6.0 mol H2, HB O 3.5 mol H2, HB O 6.0 mo...
1 answers
NH is a weak base (K= 1.8 x 10) and so the salt NH4CI acts as...
NH is a weak base (K= 1.8 x 10) and so the salt NH4CI acts as a weak acid. What is the pH of a solution that is 0.078 M in NH4CI at 25 °C? pH =...
1 answers
00 If f(3) = g(x) = I", find the power series of f(x)g(+). no M: Preview
00 If f(3) = g(x) = I", find the power series of f(x)g(+). no M: Preview...