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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