Lily Bakeries, located in Belgium, specializes in biscuit and cake products. Lily owns 75 percent of Hearty Foods, a French company acquired on January 1, 2013, for cash and stock totaling €150 million. Hearty’s book value at the date of acquisition was €70 million. Its assets and liabilities were fairly reported at the date of acquisition, except for these items:

It is now December 31, 2017. Impairment testing on the acquired goodwill reveals that total impairment during the years 2013-2016 was €2.5 million, and impairment in 2017 is €0.75 million. Lily uses the complete equity method to account for its investment internally. The December 31, 2017 trial balances of Lily and Hearty follow:

Lily follows IFRS and uses the IFRS alternative valuation for goodwill and noncontrolling interests.
Required

a. Calculate the total goodwill arising from this acquisition.

b. Prepare a schedule calculating Lily’s equity in net income of Hearty and the noncontrolling interest in Hearty’s net income for 2017.

c. Prepare a working paper consolidating the trial balances of Lily and Hearty at December 31, 2017.

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(in thousands) Plant and equipment, net (10-year life, straight-line)... Secret recipes (10-year life, straight-line).. Long-term debt (4-year life, straight-line)... Book value 150,000 - 30,000 Fair value 100,000 40,000 28,000