Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 3

Note: Problems 1 through 37 assume the use of the acquisition method.Problems 38 through 40 assume the use of the purchase method.
Following are several account balances taken from the records of Karson and Reilly as of December 31, 2011.A few asset accounts have been omitted here.All revenues, expenses, and dividends occurred evenly throughout the year.Annual tests have indicated no goodwill impairment.
On July 1, 2011, Karson acquired 80 percent of Reilly for $1,330,000 cash consideration.In addition, Karson agreed to pay additional cash to the former owners of Reilly if certain performance measures are achieved after three years.Karson assessed a $30,000 fair value for the contingent performance obligation as of the acquisition date and as of December 31, 2011.
On July 1, 2011, Reilly's assets and liabilities had book values equal to their fair value except for some trademarks (with 5-year remaining lives) that were undervalued by $150,000.Karson estimated Reilly's total fair value at $1,700,000 on July 1, 2011.
For a consolidation prepared at December 31, 2011, what balances would be reported for the following