1) The balance sheets of Power Company and Spectrum Corporation immediately prior to Powers acquisition of 95% of Spectrums voting stock are:

Power Company	Spectrum Corporation
Assets	Book Value	Book Value	Fair Value
Current assets	$ 4,000,000	$ 1,000,000	$ 700,000
Plant & equipment, net	30,000,000	8,000,000	3,000,000
Total assets	$34,000,000	$ 9,000,000
Liabilities & equity
Current liabilities	$ 2,000,000	$ 600,000	600,000
Long-term liabilities	25,000,000	6,400,000	6,200,000
Common stock, $1 par	400,000	20,000
Additional paid-in capital	3,200,000	1,380,000
Retained earnings	3,400,000	600,000
Total liabilities & equity	$34,000,000	$ 9,000,000

In addition to the assets already reported by Spectrum Corporation, the following previously unreported identifiable intangible assets are identified as owned by Spectrum Corporation. These assets are appropriately recorded as assets.

Identifiable Intangible Asset	Fair Value
Advertising jingles	$ 4,000,000
Order backlogs	1,000,000

Power Company issues 200,000 shares of $1 par common stock with a market value of $90/share to acquire 95% of Spectrum Corporations voting stock. Registration fees for the stock issue are $350,000 and out of pocket costs for the services of outside accountants and lawyers are $600,000, both paid in cash. The noncontrolling interest has an estimated fair value of $800,000.

Required

Present a schedule calculating the goodwill for this acquisition, and its allocation to the controlling and noncontrolling interest.

Prepare a working paper to consolidate the trial balances of Power and Spectrum as of the date of acquisition.

2) Preston Company acquired 80% of Sparkle Corporations stock for $2,170 in cash on January 1, 2018, when Sparkle Corporations book value was $500, consisting of $50 in capital stock, $435 in retained earnings, and $15 in accumulated other comprehensive income. The fair value of the noncontrolling interest was $430 at the date of acquisition. Preston uses the complete equity method to account for the investment on its own books.

At the time of acquisition, all of Sparkles assets and liabilities were reported at fair value, except for unreported identifiable intangible assets with a fair value of $300. These intangibles are appropriately

recorded as assets per ASC Topic 805, and have a remaining life of 2 years, straight-line as of the date of acquisition. Goodwill arising from this acquisition is tested annually for impairment. Impairment for 2018 is $300.

It is now December 31, 2018, and you are preparing the consolidated financial statements. Sparkle reported net income of $750, an other comprehensive loss of $10, and declared and paid dividends of $100 for 2018.

Required

Calculate total goodwill at the date of acquisition and its allocation to the controlling and noncontrolling interest.

Calculate equity in net income of Sparkle for 2018, as reported on Prestons separate books, and noncontrolling interest in net income of Sparkle for 2018, as reported on the consolidated income statement.

Prepare the eliminating entries, in journal form, to consolidate Preston and Sparkles trial balances at December 31, 2018.