1) Parrot Corporation acquired 90% of Swallow Co. on January 1, 2014 for $27,000 cash when Swallow's stockholders' equity consisted of $10,000 of Capital Stock and $5,000 of Retained Earnings. The difference between the fair value and book value of Swallow's net assets was allocated solely to a patent amortized over 5 years. The separate company statements for Parrot and Swallow appear in the first two columns of the partially completed consolidation working papers Answer : Eliminations Consoli- Parrot Swallow Debit Credit dated INCOME STATEMENT Sales S 20, 000 $ 15, 000 $ 35, 000 Income of Swallow 2, 970 $ 2, 970 Cost of Sales 9, 200) 4, 700) 13, 900) other Expenses 2, 300) 4, 000) 3, 000 9, 300) Noncontrolling Interest Share 330 330) p Net income 11, 470 6, 300 $ 11 , 470 Retained Earnings 1/1 11 000 5,000 b 5, 000 11 , 000 Add : t income 11, 470 6, 300 11 , 470 Less: 3, 000) 200 p Dividends 2, 000) 1, 800 (3, 000) Retained Earnings 12/31 19, 470 $ 9, 300 $ 19, 470 BALANCE SHEET Cash 2, 000 1, 900 3, 900 Accounts Receivable-net 12, 000 5, 500 17, 500 14, 000 8, 000 22, 000 Patent b 15, 000 C 3, 000 12 , 000 Land 27, 000 42, 000 69, 000 Equipment and Buildings-net 60, 000 43, 000 103, 000 Investment in Swallow Co. 28, 170 a 1, 170 C 27, 000 TOTAL ASSETS $ 143, 170 $100, 400 $227, 400 LIB. & EQUITY Accounts payable 93, 700 81, 100 $174, 800 Capital Stock 30, 000 10, 000 b 10, 000 30, 000 Retained Earnings 19, 470 9, 300 19, 470 1/1 Noncontrol. Interest b 3, 000 12/31 Noncontrol. Interest d 130 3,13 TOTAL LIAB . & EQUITY 143, 170 $100, 400 $ 36, 300 $227, 400 S 36, 300