1. Assume that, on January 1, 2019. Kusblas Campany acquired 806 interest in Eastwood Company for a purchase price that was $650,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. Kuchli uses the cost method to account for its investment in Eastwood. On the date of acquisition, Eastwood retained carings balance was $100,000. Kabla sind the acquisition date AAP as follows: 27 Paints AAP Items Initial Fair Value Useful Levers) PPE $350,000 ite $35,000 Patent 100,000 3 $20,000 Customer List 150,000 is $30,000 Goodwill 50.000 Indefinite sos0,000 585.000 80% of if the Goodwill is allocated to the parent Kachle and Eastwood report the following financial statements December 31, 2022 Income Statement Kuchler S860,000 458,000 402,000 10,000 -158,000 Sasce Eastwood $750,000 430,000 320,000 Sales Cost of goods sold Gross Profit Income (los) from subsidiary Operating expenses Net income -165.000 SISS.RO + BOY Retained Earnings Net Income Dividends Ending Retained Earnings Statement of Retained Earnings Kuchles $878,440 254,000 -175,000 Sessica Ested 5420,000 155,000 -12,500 55625 1 Balance Sheet Kachler Fastwed Assets Cash Accounts receivable Inventory Investment in subsidiary PPE, net $55,000 46,000 95,000 34,850 140.00 SUERRASSA 554,000 24.000 95,112 1273 52.046. Liabilities and Stockholders' Equity Current Liabilitica Long-term Liabilities Common Stock APIC Retained Earnings $75,000 150,000 63,500 125,000 997440 SLATION 5400,200 790,000 118,100 175,500 567 500 20:46. Required: # Show the computation of the ADJ entry Chow the number is computed). b. Prepare the consolidation joumal entries 43/1410 $1,370,940 562 500 S2.046,300 Required: Show the computation of the ADJ entry (how the number is computed). b. Prepare the consolidation journal entries. .. 1 Answer: a. ADJ b