Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for \($414,000\) cash on January 1, 2009. The remaining 40 percent of the Sea-Breeze shares traded near a total value of \($276,000\) both before and after the acquisition date. On January 1, 2009, Sea-Breeze had the following assets and liabilities:

Answer the following questions:

a. How can the accountant determine that the parent has applied the initial value method?

b. What is the annual excess amortization initially recognized in connection with this acquisition?

c. If the parent had applied the equity method, what investment income would the parent have recorded in 2012?

d. What is the parent’s portion of consolidated retained earnings as of January 1, 2012?

e. What is consolidated net income for 2012 and what amounts are attributable to the controlling and noncontrolling interests?

f. Within consolidated statements at January 1, 2009, what balance is included for the subsidiary’s Buildings account?
g. What is the consolidated Buildings reported balance as of December 31, 2012?

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Current assets Land Buildings (net) (6-year life) Equipment (net) (4-year life) Patent (10-year life) Liabilities Book Value $150,000 Fair Value $150,000 200,000 200,000 300,000 360,000 300,000 280,000 100,000 (400,000) (400,000) The companies' financial statements for the year ending December 31, 2012, follow: Revenues Operating expenses Nascent $ (600,000) 410,000 Sea-Breeze $ (300,000) 210,000 -0- Investment income Net income Retained earnings, 1/1/12 Net income Dividends paid Retained earnings, 12/31/12 Current assets Land Buildings (net) Equipment (net) Investment in Sea-Breeze Total assets Liabilities Common stock Retained earnings, 12/31/12 Total liabilities and equities (42,000) $ (232,000) $ (90,000) $ (700,000) $ (300,000) (232,000) 92,000 (90,000) 70,000 $ (840,000) $ (320,000) $ 330,000 $ 100,000 220,000 700,000 400,000 414,000 200,000 200,000 500,000 $ 2,064,000 $ 1,000,000 $ (500,000) $ (200,000) (724,000) (840,000) $(2,064,000) (480,000) (320,000) $(1,000,000)