$1)$ Intercompany sale of inventory$-20$X$9$During $20$X$9,$ Soup sold inventory to Premium that had an original cost of $$20,000$ and was sold to Premium for$$45,000$ By December $31,20$X$9,$ Premium still had on hand in inventory$$15,000$ of the amount purchased from Soup.This inventory at December $31,20$X$9$ was then sold by Premium in $20$X$10\mathrm{.}2)$ Intercompany sale of inventory $-20$X$10$During $20$X$10,$ Soup sold inventory to Premium for a sales price equal to$$70,000$ which provides a gross margin to Soup of$25\%$At December $31,20$X$10,$ Premium still had $15\%$of this inventory still on hand$\mathrm{.}3)$ Intercompany sale of Equipment$-20$X$10$On January $1,20$X$10,$ Premium sold equipment to Soup that it purchased for$$1,50,000$ on that date. It was sold to Soup for$$2,00,000$ The equipment is being depreciated on a straight line basis over its useful life$20$years with no residual value.Required:Using the tab titled "student worksheet" complete the following tasks:a$.$ In Part $1,$ prepare all elimination entries necessary for Premium to consolidate Soup at December $31,20$X$10$ for the three additional intercompany transactions identified above. b$.$ In Part $2,$ complete the consolidated balances indicated on the Student worksheet.As a reminder, your numbers need to be supported $-$ i$.$e$.$ calculated within a cell or linked via excel formula to their source, where appropriate. Use WORDS to explain your logic $--$ what are you adding$/$subtracting $-$ as your logic is more important than the final #$.$Your consolidated working paper must link to the appropriate adjustments, rather than them being just typed in$.$SFPs$$SFPsAt December $31,20$X$10$At January $1,20$X$9$Premium Corp.Soup Inc. Assets:Premium Corp.Soup Inc. Cash $$50,000$ $$1,45,000$ Cash $$1,10,000$ $$1,25,000$ Accounts and other receivables$2,40,00090,000$ Accounts and other receivables $3,20,0001,00,000$ Inventory$1,50,00080,000$ Inventory $1,10,00055,000$ Buildings and equipment$16,00,00010,40,000$ Buildings and equipment $11,50,0006,50,000$ Accumulated amortization $-$ buildings and equipment $(5,70,000)(4,45,000)$Accumulated depreciation $(2,87,500)(3,00,000)$Land $1,80,000$ Land $-2,00,000$ Investment in Soup$$10,00,000$ Investment in Soup $10,00,000-$ Other investments $70,00030,000$ $$24,02,500$ $$8,30,000$ Long term receivables $2,00,000$ $$25,40,000$ $$13,20,000$ Accounts payable $$2,00,000$ $$1,30,000$ Notes payable $1,02,5002,40,000$ Liabilities and equities: Common shares $18,00,0002,10,000$ Accounts payable $(1,50,000)1,20,000$ Retained earnings $3,00,0002,50,000$ Notes payable $4,70,0004,15,000$ $$24,02,500$ $$8,30,000$ Common shares $18,00,0002,10,000$ Retained earnings $4,20,0005,75,000$ $$25,40,000$ $$13,20,000$ SCIFor the year ended December $31,20$X$10$Premium Corp.Soup Inc. Sales and other income $$15,05,000$ $$9,00,000$ Dividend income$40,000$ $$15,45,000$ $$9,00,000$ Cost of sales$10,00,0005,40,000$ Amortization expense $70,00045,000$ Other expenses$2,25,0002,15,000$ Income tax expense$50,00025,00013,45,0008,25,000$ Net Income and Comprehensive income $$2,00,000$ $$75,000$ Student worksheet$$ Jolene Kendrew, Michelle Lysak, Keri Norrie $$ Camosun CollegeNote that greyed section is duplicated from homework #$3$ solution $-$ see the response area below after the greyed sectionPurchase Price DiscrepancyExhibit APurchase Price$$10,00,0000\mathrm{.}80$$$12,50,000$Book Value at Acquisition$4,60,0004,60,0007,90,000$FMV Increments:Additional $($Less$)$ Expense for$20$X$1020$X$9-20$X$10$NIRetained Earnings$(2$ years$)$Patents$1,50,00053000060,000$Building and equipment$52,500105,25010,500$Notes payable$38,40049,60019,2002,40,90044,85089,7002,40,90044,85089,700$Goodwill$5,49,10054,91054,9107,90,00099,7601,44,6101$Investment elimination entriesDR Common shares$2,10,000$DR Retained earnings$2,50,000$DR Patents$1,50,000$DR Buildings and equipment$52,500$DR Notes payable$38,400$DR Goodwill$5,49,100$ CR Investment in S$10,00,000$ $$-$ CR NCSHI$2,50,000$ Accumulated depreciation entry$1$ADR Accumulated amortization$3,00,000$ CR Buildings and equipment$3,00,0002$Fair value increment amortization$2$ADR Amortization expense$5,250$DR Retained earnings$5,250$ CR A$/$A Building and equipment$10,5002$BDR Amortization expense$30,000$DR Retained earnings$30,000$ CR Patent$60,0002$CDR Other expense$9,600$ DR Retained earnings$9,600$ CR Notes payable $19,2002$DDR Other expense $($or impairment expense$)54,910$ CR Goodwill $54,9103$NCSHI share of REAllocation RE to NCSHISub RE$,$ Dec $31,20$X$10$ $$5,75,000$ DR Retained earnings$36,078$Sub RE$,$ Jan $1,20$X$9$ $$2,50,000$ CR NCSHI$36,078$ Increase in RE since acquisition $$3,25,000***$NCSHI$\text{'}$s value has increase since acquisition, so we are increasing the value attributable to NCSHI with this entryFair value income adjustments $$(1,44,610)$ $$1,80,3904$ADividend entryNCSHI share $$36,078$ DR Dividend income$40,000$Dividend from sub $\%$ ownership by Parent CR Retained earnings$40,00050,0000\mathrm{.}84$BIntercompany loanDR Notes payable $1,50,000$ CR Long term receivables$1,50,000$ DR Sales and other income$22,000$ CR Other expenses $22,000$ Additional entries related to intercompany transaction information in Homework $4$ tab:Calculated the below four consolidated balances, ensuring to demonstrate your logic using words $+$ cross reference to your worksheet entriesUse WORDS to explain your logic $--$ what are you adding$/$subtracting $-$ as your logic is more important than the final #$.$Use WORDS to explain your logic $--$ what are you adding$/$subtracting $-$ as your logic is more important than the final #$.$The below template in Column A is provided as a guide $-$ you can change it and all parts may not be applicable$4$C$0$Eliminate interco SaleConsolidated InventoryInterco unrealized$/$realized profitPremium$0$ Soup$200000$Adjustments $($explain logic and link # below$)$Adjust NCSHI $($upstream$)0$Eliminate interco SaleConsolidated Building and EquipmentPremium$0$ Interco unrealized$/$realized profitSoupAdjustments $($explain logic and link # below$)$Adjust NCSHI $($upstream$)$Consolidated Cost of Goods Sold expensePremium$04$E$0$SoupEliminate interco SaleAdjustments $($explain logic and link # below$)$Interco unrealized$/$realized profitAdjust NCSHI $($upstream$)$Consolidated amortization expensePremium $-$ SoupAdjustments $($explain logic and link # below$)$