On January 1, 2025, Push Company purchased an 80% interest in the capital stock of Way- Down Company for $820,000. At that time, Way Down Company had capital stock of $500,000 and retained earnings of $100,000. Differences between the fair value and the book value of identifiable assets of Way Down Company were as follows:

The book values of all other assets and liabilities of Way Down Company were equal to their fair values on January 1, 2025. The equipment had a remaining life of five years on January 1, 2025. The inventory was sold in 2025. Way Down Company revalued its assets on January 2, 2025. New values were allocated on the basis of the fair value on Way Down Company as a whole imputed from the transaction. Financial data for 2025 are presented here:

Required:
A. In general journal form, prepare the entry made by Way Down Company on January 2, 2025, to record the effect of the pushed down values implied by the purchase of its stock by Push Company assuming that values were allocated on the basis of the fair value of Way Down Company as a whole imputed from the transaction.
B. Prepare a consolidated financial statements workpaper for the year ended December 31, 2025.
C. What effect does the decision to apply the full push down approach have on the following items (compared to the case where push down accounting is not used):
1. Consolidated net income?
2. Consolidated retained earnings?
3. Consolidated net assets?
4. Noncontrolling interest in consolidated net assets?

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Equipment Land Inventory Fair Value in Excess of Book Value $125,000 62,500 37,500