1. Following is the balance sheet for Cake at 1/1/2016. On 1/1/2016, Choco acquired all of the outstanding common stock of Cake for $1,700,000 in cash. Book value Fair value FV-BV Current assets $800,000 $800,000 Land 200,000 300,000 Patented technology (20 years) 400,000 600,000 Equipment (5 years) 600,000 750,000 Total assets Liabilities $1,000,000 $1,000,000 Common stock 200,000 Additional paid-in capital 300,000 Retained earnings 500,000 Total liabilities and stockholders' equity During 2016, Cake earns net income of $160,000 and pays a $60,000 cash dividend. 3) (1) Let's assume Choco has adopted the partial equity method for its internal reporting of investment in Cake. Calculate "Investment in Cake" and "Equity in Cake earnings" balance at the end of 2016. (2) Prepare Consolidation Entry S, A, I, D, E (Partial equity method) Partial Equity Method Consolidated Totals Income Statement Revenues Cost of goods sold Expense Equity in Cake earnings Choco Company and Cake Company Consolidated Worksheet For Year Ending December 31, 2016 Choco Cake Consolidated Entries Company Company Debit Credit $(3,500,000) $(500,000) 1,870,000 240,000 550,000 100.000 (160,000) $(1.240,000) $(160,000) Net income Statement of R.E. Retained earnings, 1/1/16 Net income (above) $(2,100,000) (1.240,000) 400,000 $(2,940,000) $(500,000) (160,000) 60,000 $(600,000) Dividends declared Retained earnings 12/31/16 Balance Sheet Current assets $3,220,000 $920,000 Investment in Cake 1,800,000 Land 1,000,000 300,000 Patented technology 1.200,000 2,800,000 380.000 700,000 Equipment Goodwill Total assets $10,020,000 $2,300,000 Liabilities $(3,580,000) $(1,200,000) Common stock (1,500,000) (200,000) Additional paid in capital (2,000,000) (300,000) Retained earnings 12/31/16 (2,940,000) (600,000) Total Liabilities and Equity $(10,020,000) $12,300,000) (3) Prepare consolidated total column for worksheet attached (Table 2)