Balances reported for sales consolidated net income

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Reference no: EM131194996

Following are several account balances taken from the records of Karson and Reilly as of December 31, 2013. A few asset accounts have been omitted here. All revenues, expenses, and dividends occurred evenly throughout the year. Annual tests have indicated no goodwill impairment.

	Karson	Reilly
Sales	$ (800,000)	$(500,000)
Cost of goods sold	400,000	280,000
Operating expenses	200,000	100,000
Investment income	not given	-0-
Retained earnings, 1/1	(1,400,000)	(700,000)
Dividends	80,000	20,000
Trademarks	600,000	200,000
Royalty agreements	700,000	300,000
Licensing agreements	400,000	400,000
Liabilities	(500,000)	(200,000)
Common stock ($10 par value)	(400,000)	(100,000)
Additional paid-in capital	(500,000)	(600,000)

On July 1, 2013, Karson acquired 80 percent of Reilly for $1,330,000 cash consideration. In addition, Karson agreed to pay additional cash to the former owners of Reilly if certain per- formance measures are achieved after three years. Karson assessed a $30,000 fair value for the contingent performance obligation as of the acquisition date and as of December 31, 2013.

On July 1, 2013, Reilly's assets and liabilities had book values equal to their fair value except for some trademarks (with 5-year remaining lives) that were undervalued by $150,000. Karson estimated Reilly's total fair value at $1,700,000 on July 1, 2013.

For a consolidation prepared at December 31, 2013, what balances would be reported for the following?
•Sales Consolidated Net Income
•Expenses Retained Earnings, 1/1
•Noncontrolling Interest in Trademarks
•Subsidiary's Net Income Goodwill

Reference no: EM131194996

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