ClipRite (600,000) 400,000 100,000 0 $ (100,000) (850,000) (100,000) 50,000 (900,000) 300,000 700,000 0 600,000 (200,000) $ 1,400,000 (400,000) (100,000) (900,000) $(1,400,000) ProForm Sales (800,000) Cost of goods sold 535,000 Operating expenses 100,000 Dividend income (35,000) Net income $ (200,000) $(1,300,000) $ Retained earnings, 1/1/21 Net income (200,000) Dividends declared 100,000 Retained earnings, 12/31/21 $(1,400,000) Cash and receivables $ Inventory 400,000 290,000 910,000 Investment in ClipRite Fixed assets 1,000,000 Accumulated depreciation Totals Liabilities Common stock Retained earnings, 12/31/21 Totals (300,000) $ 2,300,000 $ (600,000) (300,000) (1,400,000) $(2,300,000) $

Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2017, for $567,600 in cash. Lowly's book value at that date was reported as $760,000 and the fair value of the noncontrolling interest was assessed at $378,400. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2018, Lowly acquired a 20 percent interest in Mighty. The price of $440,000 was equivalent to 20 percent of Mighty's book and fair value. Neither company has paid dividends since these acquisitions occurred. On January 1, 2018, Lowly's book value was $992,000, a figure that rises to $1,054,500 (common stock of $300,000 and retained earnings of $754,500) by year-end. Mighty's book value was $2.20 million at the beginning of 2018 and $2.30 million (common stock of $1 million and retained earnings of $1,300,000) at December 31, 2018. No intra-entity transactions have occurred and no additional stock has been…

am. 152.

ProForm acquired 60 percent of ClipRite on June 30, 2020, for $1,140,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $15,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $760,000 at the acquisition date. The 2021 financial statements are as follows: Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in ClipRite Fixed assets Accumulated depreciation Totals Liabilities Common stock Retained earnings, 12/31/21 Totals Sales Cost of Goods Sold ProForm (900,000) 585,000 200,000 (48,000) $ (163,000) $ $ 500,000 390,000 1,140,000 2,000,000 (700,000) $ 3,330,000 $ (667,000) (400,000) (2,263,000) $ (3,330,000) Sales Cost of goods sold Operating expenses Dividend income Net income…