1.

Pine Resorts paid $48,775 in cash and stock to acquire 60% of the stock of Sharbot Hotels on January 1, 2021. Sharbot's identifiable net assets were reported at amounts approximating fair value, except that it had $40,000 in previously unrecorded favorable leases (8-year life, straight-line). The fair value of the noncontrolling interest on the acquisition date was estimated at $31,225. Goodwill impairment loss for 2021 is $4,000. The trial balances of Pine and Sharbot on December 31, 2021, one year after the acquisition, follow. Pine uses the complete equity method to report its investment in Sharbot on its own books.

	Pine Resorts Dr (Cr)	Sharbot Hotels Dr (Cr)
Current assets	$ 15,000	$ 4,000
Plant & equipment, net	200,000	80,000
Investment in Sharbot Hotels	52,875	--
Current liabilities	(8,000)	(3,000)
Long-term debt	(169,775)	(56,000)
Common stock	(1,000)	(200)
Additional paid-in capital	(25,000)	(3,800)
Retained earnings, Jan. 1	(40,000)	(5,000)
Sales revenue	(400,000)	(200,000)
Equity in net income	(4,100)	--
Cost of goods sold	250,000	120,000
Operating expenses	130,000	64,000
Total	$ 0	$ 0

Required

a. Calculate the total goodwill for this acquisition and its allocation to the controlling and noncontrolling interest.

b. Prepare a schedule calculating 2021 equity in net income of Sharbot Hotels, appearing on Pine Resorts' separate books, and the 2021 noncontrolling interest in consolidated net income, appearing on the 2021 consolidated income statement.

c. Prepare, in good form, journal entries (C), (E), (R), and (O) needed for the consolidation process at 12/31/2021.

d. Prepare a working paper to consolidate the December 31, 2021 trial balances of Pine Resorts and Sharbot Hotels.