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On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of Gauge Rite Corporation for $1GaugeRite $(1,026,500) 635,000 137,000 34,500 Sales Cost of goods sold Depreciation expense Other operating expenses SubsidiaRequired A Required c Show how Procise derived its December 31, 2018, Investment in GaugeRite account balance. (Amounts to beAccounts Consolidated Totals Sales Cost of goods sold Depreciation expense Other operating expenses Subsidiary income Net IncTotal assets $ 13,409,000 $ 3,469,500 Accounts payable Long-term debt Common stock—Procise Common stock—GaugeRite Retained ea

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Answer #1

Part A

Consideration transferred 1/1/17

1947900

Increase in GaugeRite’s retained earnings to 1/1/18 (910000-679000)

231000

In-process R&D write-off in 2017

(44500)

Amortizations 2017

(8300)

Income 2018

220000

Dividends declared 2018

(25500)

Amortization 2018

(8300)

Investment balance 12/31/18

2312300

Part C

Procise and Subsidiary GaugeRite

Consolidated Worksheet

for the year ended December 31, 2018

Consolidated entries

Accounts

12/31/18

Procise

12/31/18

GuageRite

Debit

Credit

Consolidate totals

Sales

(3715800)

(1026500)

(4742300)

Cost of goods sold

1735000

635000

2370000

Depreciation expense

324000

137000

8300

469300

Other operating expenses

216000

34500

250500

Subsidiary income

(211700)

0

211700

0

Net income

(1652500)

(220000)

(1652500)

Retained earnings 1/1/18

(3162500)

(910000)

910000

(3162500)

Net income

(1652500)

(220000)

(1652500)

Dividends declared

100000

25500

25500

100000

Retained earnings 12/31/18

(4715000)

(1104500)

(4715000)

Cash

194200

36500

230700

Accounts receivable

883000

211000

1094000

Inventory

972000

611000

1583000

Investment in GuageRite

2312300

25500

2337800

0

Land

3672500

796000

4468500

Equipment (net)

5000000

1815000

51800

8300

6864800

Goodwill

375000

0

138000

513000

Total assets

13409000

3469500

14754000

Accounts payable

(224000)

(496000)

(720000)

Long-term debt

(3320000)

(849000)

(4169000)

Common stock-Procise

(5150000)

(5150000)

Common stock-GuageRite

(1020000)

102000

0

Retained earnings 12/31/18

(4715000)

(1104500)

(4715000)

Total liabilities and equity

(13409000)

(3469500)

(14754000)

66400-8300 = 58100

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