Question

Parente Corporation acquired 100 percent of Benson Company’soutstanding common stock on January 1, 2015 for $550,000 in cash.Benson reported net assets with a carrying amount of $350,000 atthat time. Some of Benson’s assets either were unrecorded (havingbeen internally developed) or had fair values that differed frombook values as follows:

BookValues Fair Values

Trademarks (indefinitelife) $ 60,000 $ 160,000

Customer relationships (5-year remaining life) -0- 75,000

Equipment (10-year remaininglife) 342,000 312,000

Any goodwill is considered to have an indefinite life with noimpairment charges during the year.

During 2015, Benson had the following income and dividendsdeclared in its own separately prepared financial reports:

Net Income -$222,000

Dividends -$80,000

Following are financial statements at the end of the first yearfor these two companies prepared from their separately maintainedaccounting systems. Benson declared and paid dividends in the sameperiod. Credit balances are indicated by parentheses.

Parente Benson

Revenues $ (1,125,000) $ (520,000)

Cost of GoodsSold 300,000 228,000

DepreciationExpense 75,000 70,000

AmortizationExpense 25,000 -0-

Income fromBenson (210,000) -0-

NetIncome $ (935,000) $ (222,000)

Retained Earnings1/1 $ (700,000) $ (250,000)

NetIncome (935,000) (222,000)

Dividendsdeclared 142,000 80,000

Retained Earnings12/31 $(1,493,000) $ (392,000)

Cash $ 185,000 $ 105,000

Receivables 225,000 56,000

Inventory 175,000 135,000

Investment inBenson 680,000 -0-

Trademarks 474,000 60,000

CustomerRelationships -0- -0-

Equipment(net) 925,000 272,000

Goodwill -0- -0-

TotalAssets $ 2,664,000 $ 628,000

Liabilities $ (771,000) $ (136,000)

CommonStock (400,000) (100,000)

Retained Earnings12/31 (1,493,000) (392,000)

Total Liabilities andEquity $(2,664,000) $ (628,000)

Requirements:

a )Prepare Parente’s acquisition-date fair-value allocationschedule for its investment in Benson.

b) Show how Parente determined its December 31, 2015 Investmentin Benson balance.

c) Prepare a worksheet to determine the balances for Parente’sDecember 31, 2015 consolidated financial statements.

Please answer the previous questions in the worksheet providedat the bottom of the page.

			Parente Company andConsolidated Subsidiary
			Consolidation Worksheet
			For Year Ending December 31,2015
						Consolidation Entries			Consolidated
			Parente	Benson	Type	Debit	Type	Credit	Totals
Revenues			(1,125,000)	(520,000)
Cost of goods sold			300,000	228,000
Depreciation expense			75,000	70,000
Amortization expense			25,000	0
Equity Income from Benson			(210,000)	0
NetIncome			(935,000)	(222,000)
Retained earnings 1/1			(700,000)	(250,000)
Net Income			(935,000)	(222,000)
Dividends paid			142,000	80,000
Retained earnings 12/31			(1,493,000)	(392,000)
Cash			185,000	105,000
Receivables			225,000	56,000
Inventory			175,000	135,000
Investment in Benson			680,000	0
Trademarks			474,000	60,000
Customer relationships			0	0
Equipment (net)			925,000	272,000
Goodwill			0	0
Totalassets			2,664,000	628,000
Liabilities			(771,000)	(136,000)
Common stock			(400,000)	(100,000)
Retained earnings 12/31			(1,493,000)	(392,000)
Totalliabilities and equity			(2,664,000)	(628000)		0		0