0 Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $3,724,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $100,000 more than its book value, an: unrecorded Patent that the parent valued at $200,000, and Goodwill of $300,000, 80% of which is allocated to the parent. The parent and the subsidiary report the balance sheets on the acquisition date in b. below: a. Prepare the consolidation entries on the acquisition date. Consolidation Worksheet Description Debit Credit TE] Common stock 285,600 x APIC 357,000 x Retained earnings 2,213,400 x 0 Equity investment 2,284,800 x Noncontrolling interest 571,200 X [A] PPE, net 300,000 X Patent 600,000 x 0 Goodwill 900,000 X 0 Equity investment 1,440,000 x Noncontrolling interest 360,000 x 0 0 0 0 0 0 Consolidated $ 3,407,715 x 3,171,168 x 4,576,572 x 0 b. Prepare the consolidation spreadsheet on the acquisition date. Elimination Entries Parent Subsidiary Dr Cr Cash $920,753 $215,152 Accounts receivable 725,760 331,296 Inventory 1,099,980 425,544 Equity investment 1,241,600 2,284,800 X [E] 1,440,000 X [A] Patent [A] 600,000 x Goodwill [A] 900,000 X PPE, net 5,291,244 787,304 [A] 300,000 x Total Assets $9,279,337 $1,759,296 Current liabilities $814,779 $331,296 Long-term liabilities 4,000,000 476,000 Common stock 927,045 95,200 [E] 285,600 X APIC 688,905 119,000 [E] 357,000 X Noncontrolling interest 571,200 X [E] 360,000 X [A] Retained earnings 2,848,608 737,800 [E] 2,213,400 x Total Liabilities and Equity $9,279,337 $1,759,296 2,856,000 x 931,200 x 600,000 x 900,000 X 18,535,644 x $ 3,191,099 X $ 3,438,225 X 13,428,000 x 2.781,135 x 2,066,715 X 931,200 x 8,545,824 x $31,191,099 X