256 Chapter 4 I Consolidated Financial Statements and Intercompany Assume that a parent company acquired its subsidiary on January 1, 2010, at a purchase price thar S400,000 in excess of the book value of the subsidiary's Stockholders Equity on the acquisition dae The excess was assigned entirely to an unrecorded License Agreement owned by the subsidiary License Agreement asset is being depreciated over its 10-year useful life on a straight-line basis no salvage value. 53. Prepare consolidation spreadsheet for intercompany sale of equipment-Equity method In January 2013, the parent sold Equipment to its wholly owned subsidiary for a cash price o $70,000. The parent had acquired the equipment at a cost of $90,000 and depreciated the over its 10-year useful life using the straight-line method (no salvage value). The parent had depreck ated the equipment for 3 years at the time of sale. The subsidiary retained the depreciation policy of t parent and depreciated the equipment over its remaining 7-year useful life. Following are financial statements of the parent and its subsidiary as of December 31, 2016. The parent uses the equity method to account for its Equity Investment. ParentSubsidiary Parent Subsidiary Balance sheet: Income statement: Sales. s 344,062 355 242 1.144,5001,294,73 1,700.4001,856050 Cost of goods sold 4708,800) (1.806,600) Cash... Gross proft. 382,540 (981,000) 782,860)PPE, net ..1,995,864 Net income$ Statement of retained earnings: BOY retained earnings......$3,822,172 $1,232.740 421.540 Equity investment. $11.764,066 $8,407 352 677,475 421,540 Liabilities and stockholders' equity Accounts payable. Other current liabilities $ 660,540 $ 535,958 692,530 (60,220) 778,260 EOY retained earnin (246,548) $41809,364 $1,038,795 Long-termbli 2.,500,000 3,3000 373.364 466,705 Retained earnings . 4,808,364 1,038,795 $11,764,066 $6,407,352 361,662 2,655,240 Common stock Prepare the journal entry that the parent made to record the sale of the equipment to the subsidiary, the journal entry that the subsidiary made to record the purchase, and the II) entries for the year of sale. Compute the remaining portion of the deferred gain at January 1, 2016. Show the computation to yield the $382,540 of Income (loss) from subsidiary reported by the parent for the year ended December 31, 2016. a. b. c. d. Compute the Equity Investment balance of $1,995,864 at December 31, 2016. e. Prepare the consolidation entries for the year ended December 31,2016. f Prepare the consolidation spreadsheet for the year ended December 31, 2016