Pablo S.A. is a manufacturer of children's shoes, located in Spain. It owns 51 percent of the voting stock of Stabifoot, a specialty shoe manufacturer located in Belgium. Pablo acquired its interest in Stabifoot several years ago, and has consolidated Stabifoot in its financial statements since the date of acquisition. Per IFRS, Stabifoot's identifiable assets and liabilities were revalued to fair value at the date of acquisition. This process led to recognition of customer and distributor relationships valued at 40 million, and goodwill of 120 million. Pablo uses the IFRS alternative, and does not attribute goodwill to the noncontrolling interest. As of the beginning of the current year, the goodwill and identifiable intangibles are not impaired. Goodwill is impaired by 10 million in the current year. Pablo and Stabifoot engage in intercompany transfers of merchandise. Below is information on these transactions: Pablo sells merchandise to Stabifoot at a markup of 20% on price. Stabifoot sells merchandise to Pablo at a markup of 20% on cost. Balance in Pablo's beginning inventory, purchased from Stabifoot, 24 million. Balance in Pablo's ending inventory, purchased from Stabifoot, 26.4 million. Total sales from Stabifoot to Pablo, at the price charged to Pablo, 125 million. Balance in Stabifoot's beginning inventory, purchased from Pablo, 22.5 million. Balance in Stabifoot's ending inventory, purchased from Pablo, 25 million. Total sales from Pablo to Stabifoot, at the price charged to Stabifoot, 130 million. Pablo uses the complete equity method to account for its investment in Stabifoot on its own books. The separate trial balances for the two companies for the current year are below.

Required

a. Calculate Pablo’s equity in net loss and the noncontrolling interest in net income for the current year.

b. Prepare a working paper to consolidate the trial balances of Pablo and Stabifoot. Label your eliminating entries (C), (I), (E), (R), (O), and (N).

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(in thousands) Current assets Plant assets, net. Intangibles Investment in Stabifoot Liabilities... Capital stock Retained earnings, beginning. Sales revenue.. Equity in net loss Cost of goods sold. Operating expenses. Total.. Pablo Dr (Cr) 80,000 210,440 10,000 Stabifoot Dr (Cr) 60,000 137,000 178,236 (286,300) (89,000) (2,000) (1,000) (187,000) (99,000) (800,000) (500,000) 6,624 650,000 300,000 140,000 192,000 0 0