Compute the consolidated balances for gardner and drake

Reference no: EM132220487

Question - On January 1, 2017, Gardner, Inc. acquired 100 percent of the common stock of Drake Company for $760,000 in cash and other fair-value consideration. Gardner Company fair value was allocated among its net assets as follows:

The December 31, 2018 trial balance for the parent and subsidiary follows:

Fair value of consideration transferred for Drake Company		$760,000
Book value of Drake Company
Common stock an APIC	$130,000
Retained Earnings	$370,000	$500,000
Excess Fair value over book value to:
Trademark (10-year remaining)	$40,000
Existing Technology (5-year remaining)	80,000	120,000
Goodwill		$140,000

	Gardner Inc.	Drake Company
Revenues	$(990,000)	$(210,000)
Cost of Goods Sold	500,000	90,000
Depreciation Expense	100,000	5,000
Amortization Expense	55,000	18,000
Dividend Income	$(40,000)	0
Net Income	$(375,000)	$(97,000)

Retained Earnings, 1/1	$(1,555,000)	$(450,000)
Net Income	(375,000)	(97,000)
Dividends Paid	250,000	40,000
Retained Earnings 12/31	$(1,6880,000)	$(507,000)

Current Assets	$870,000	$355,000
Investment in Drake	760,000
Equipment (Net)	765,000	225,000
Trademark	235,000	100,000
Existing Technology	0	45,000
Goodwill	450,000	0
Total Assets	$3,080,000	$725,000

Liabilities	$(780,000)	$(88,000)
Common Stock	(500,000)	(100,000)
Additional paid-in-capital	(120,000)	(30,000)
Retained Earnings 12/31	(1,680,000)	(507,000)
Total Liabilities & Equity	$(3,080,000)	$(725,000)

Required -

(1) Using Initial Value method, explain the calculation to obtain the *C entry.

(2) Using Excel, prepare a worksheet to compute the consolidated balances for Gardner & Drake using the Initial Value Method.

Reference no: EM132220487

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