272 Equity method uurchase price that in the acquisition date Customer List fe and the Custom htline basis with the Chapter 41 Consolidou LOS 52. Prepare consolidation spreadsheet for intercompany sale of equipment Eaule Assume a parent company acquired its subsidiary on January 1, 2016, at a pure $500,000 in excess of the book value of the subsidiary's Stockholders' Equity on the or that excess, $240.000 was assigned to a Patent, and S150,000 to an unrecorded by the subsidiary. The Patent asset is being depreciated over its 10-year legal life an List is being amortired over a 5-year period. Amortization is computed on a straightli salvace value. The remaining S110,000 of the purchase price was assigned to Goodwill In January 2018, the parent sold Equipment to its wholly owned subsidiary for $160,000. The parent had acquired the equipment at a cost of $185.000 and depreciate over its 10-year useful life using the straight-line method (no salvage value). The paren ated the equipment for 5 years at the time of sale. The subsidiary retained the depreciation parent and depreciated the equipment over its remaining 5-year useful life. Following are financial statements of the parent and its subsidiary for the year ended De 2019. The parent uses the equity method to account for its Equity Investment. The Custom Patent assets were amortized as part of the parent's equity method accounting. Parent Subsidiary v for a cash price of ciated the equipment parent had depreci eciation policy of the nded December 31. The Customer List and Parent Subsidiary Balance sheet: $2,500,000 (1,520,000) 980,000 $ $6,920,000 (4,422,000) 2,498,000 279,500 (1,777,500) $1,000,000 Income statement: Sales Cost of goods sold Gross profit............... Income (loss) from subsidiary........ Operating expenses. Net income Statement of retained earnings: Beginning retained earnings....... Net income.......... Dividends... Ending retained earnings ........... Assets Cash. Accounts receivable. Inventory.... PPE, net... Equity investment... $ 160,000 500,000 840,000 5,000,000 2,000,000 $8,500,000 408,000 605,000 865,000 2,622.000 (660,000) $ 320,000 $4,500,000 $3,290.000 1,000,000 (290,000) $4,000,000 $ 730,000 320,000 (50,000) $1,000,000 Liabilities and stockholders' equity Accounts payable. . . . . . . . . . . . Other current liabilities ........ Long-term liabilities........... Common stock .... APIC..... Retained earnings ... $ 186,000 570,000 2,500,000 493,000 751,000 4,000,000 $8,500,000 $ 357,500 586,000 1,800,000 200,000 556,500 1,000,000 $4,500,000 a. 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 [I] entries for the year of sale. b. Compute the remaining portion of the deferred gain at January 1, 2019. c. Show the computation to yield the $279,500 of Income (loss) from subsidiary reported by the parent for the year ended December 31, 2019. d. Compute the Equity Investment balance of $2,000,000 at December 31, 2019, e. Prepare the consolidation entries for the year ended December 31, 2019. Prepare the consolidation spreadsheet for the year ended December 31, 2019