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 On January 1, 2019 Weldink Corporation acquired 100% of Stokhorst Corporation for an amount of € 730,000 in cash

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 On January 1, 2019 Weldink Corporation acquired 100% of Stokhorst Corporation for an amount of € 730,000 in cash. The allocation of the consideration transferred is: Common stock Additional paid-in capital Retained earnings Shareholders' equity Stokhorst 100,000 30,000 370,000 500,000 Excess fair value over bookvalue: In process R&D Computer software Trademarks 75,000 -30,000 120,000 Goodwill Consideration transferred 165,000 65,000 730.000
At the acquisition date, the computer software had a remaining life of 4 years, and the trademarks were estimated to have a remaining life of 10 years. By the end of 2019, it became clear that the acquired in-process R&D would not yield any economic benefit and Weldink recognized an impairment loss. At December 31, 2020 Stokhorst's accounts payable include a € 30,000 amount owed to Weldink, The trial balances for Weldink and Stokhorst for the year ending December 31, 2020 follow: Weldink Stokhorst 345,000 1.034,000 856,000 713,000 650,000 Current assets Investment in Stokhorst Equipment Computer software Trademarks Goodwill Current liabilities Common stock Additional paid-in capital Retained earnings, December 31, 2020 305,000 130,000 100,000 -870,000 -500,000 -120,000 -1,763,000 0 -170,000 -100,000 -30,000 -580,000 0 Retained earnings, January 1, 2020 Net income Dividend declared and paid Retained earnings, December 31, 2020 -1,552,500 -460,500 250,000 -1,763,000 -450,000 -180,000 50,000 -580,000 Revenues Costs of goods sold Depreciation expense Amortization expense Equity in subsidiary earnings Net income -1,100,000 625,000 140,000 50,000 -175,500 -460,500 -325,000 122,000 12,000 11,000 -180,000 Question 8 Explain how Weldink derived the € 856,000 balance in the Investment account. Question 9 Prepare a worksheet to consolidate the balance sheet and the profit-and-loss account for these two companies.