1. prepare the consolidation worksheet entries for December 31, 2021; 2. prepare the consolidation worksheet entries for December 31, 2022. Assuming during 2022, Sierra reports net income of 200,000 and paid dividends of 70,000.

Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Fair Value Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) $ 65,000 287,000 122,000 (176,000) $ 290,000 263.000 216,000 (157,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Page 207 Padre Sierra $(1,394,980) 774,000 274,000 Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra $ (684,900) 432,000 11,600 6,100 9,200 -0- 0 Net income 52,100 (177,120) $ (472,000) $(1,275,000) (472,000) 260,000 Retained earnings, 1/1/21 Net income Dividends declared $ (226,000 $ (530,000) (226,000) 65,000 Retained earnings, 12/31/21 $(1,487,000) $ (691,000) $ $ Current assets Investment in Sierra Land Buildings and equipment (net) Copyright 856,160 927,840 360,000 909,000 764,700 -0- 65,000 275,400 115,900 -0- Total assets $ 1,221,000 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) $ 3,053,000 $ (275,000) (541,000) (300,000) (450,000) (1,487,000) $ (194,000) (176,000) (100,000) (60,000) (691,000) Total liabilities and equities $(3,053,000) $(1,221,000)