(Kellogg's) acquired 75% of the outstanding stock of Wholesome & Hearty Foods ("Wholesome") at the end of 2007, for cash and stock totaling $120 million. Assume that Wholesome's assets and liabilities were fairly reported at the date of acquisition, except for these items:

Wholesome's book value at the date of acquisition was $74 million, and the fair value of the 25% noncontrolling interest was $35 million. It is now December 31,2013 (the end of the sixth year since acquisition). Impairment testing on the goodwill arising in this acquisition reveals that total impairment during 2008-2012 is $2 million, and impairment in 2013 is $1 million.
Wholesome sells merchandise and raw materials to Kellogg's at a markup of 30% on cost. Here is information on these intercompany sales (in thousands):

Below are the separate trial balances of Kellogg's and Wholesome at December 31,2013.

Required (In your answers below, present all numbers in thousands.)
a. Calculate the initial goodwill arising from this acquisition, and its allocation to the controlling and noncontrolling interests.
b. Prepare a schedule computing Kellogg's equity in net income of Wholesome and noncontrolling interest in net income for 2013.
c. Prepare a working paper to consolidate the trial balances of Kellogg's and Wholesome at December 31,2013.

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in thousands) Book value Fair value Plant & equipment, net (10-year life, straight-line)... Veggie burger recipe (10-year life, straight-line) Long-term debt (4-year life, straight-line)..NN.. $150,000 0 30,000 $135,000 25,000 34,000 $10,400 Inventory, December 31, 2013, reported on Kellogg's books . . . . . .. …·······.. . . . . . . 13,000 60,000 Transfer price for 2013 sales from Wholesome to Kellogg's......_ .. . . . Dr (Cr) (in thousands) Kellogg's Wholesome Current assets35,000 Plant and equipment, net.P. Investment in Wholesome.AAARARAN Identifiable intangibles Current liabilities. Long-term debt Capital stock. Retained earnings, January Sales revenue. Equity in net income of Wholesome Cost of sales... Operating expenses 20,000 192,000 262,650 131,100 100,000 (30,000) 350,000) (80,000) (60,000) 400,000) (1,750) 250,000 143,000 10,000 25,000) (100,000) (54,000) (38,000) (140,000) .. 65,000 70,000 0