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On January 1 2017 Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $1980000 cash On the acquisition date GaugeRite had the following balance

On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $1,980,000 cash. On the acquisition date, GaugeRite had the following balance sheet: At the acquisition date, the following allocation was prepared: Fair value of consideration transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,980,000 Book value acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650,000 Excess fair value over book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000 To in-process research and development . . . . . . . . . . . . . . . . . . . . .$44,000 To equipment (8-year remaining life) . . . . . . . . . . . . . . . . . . . . . . . 56,000 . . . . . 100,000 To goodwill (indefinite life) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 230,000 Although at acquisition date Procise had expected $44,000 in future benefits from GaugeRite s in-process research and development project, by the end of 2017 it was apparent that the research project was a failure with no future economic benefits. On December 31, 2018, Procise and GaugeRite submitted the following trial balances for consolidation. There were no intra-entity payables on that date. a. Show how Procise derived its December 31, 2018, Investment in GaugeRite account balance. b. Explain the treatment of the acquired in-process res

Apr 22 2020 View more View Less

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