49. Inferring consolidation entries from consolidated financial statements-Cost method Assume a parent company acquired a subsidiary on January 1, 2012. The purchase price was $1,242,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following [A] assets Original Original Useful Amount A] Asset Life Property, plant and equipment (PPE), net . . .. . . . . . . . . . . . . . . . . . . . . 300,000 432,000 510,000 20 years 12 years Indefinite $1,242,000 The parent company uses the cost method of pre-consolidation Equity Investment bookkeeping. The Goodwill asset has been tested annually for impairment and has not been found to be impaired. Selected accounts from the parent, subsidiary, and consolidated financial statements for the year ended December 31, 2016, are as follows: Parent Subsidiary Consolidated Income statement: $9,075,000 $1,980,000 $11,055,000 (7,722,000) 3,333,000 0 (1,927,080) (6,534,000) (1,188,000) 792,000 - 2,541,000 40,800 (514,800) Statement of retained earnings 277,200 (40,800) 1,405,920 (286,440) (286,440) Balance sheet: Assets 2,686,800 459,600 3,146,400 Statement of retained earnings 277,200 (40,800) 1,405,920 (286,440) (286,440) Balance sheet: Assets 2,686,800 3,520,200 2,112,000 Property, plant and equipment (PPE), net . . . . .. . . .. 12,752,640 459,600 589,800 3,146,400 4,110,000 0 14,069,040 252,000 510,000 $24,308,400 1,091,400 $22,781,400 $2,652,000 Liabilities and stockholders' equity 1,578,840 5,550,000 845,520 6,215,880 246,840 660,000 132,000 165,000 1,259,400 $1,517,400 1,825,680 6,210,000 845,520 6,215,880 7,693,920 $22,781,400 $2,652,000 $24,308,400 For the year ended December 31, 2016, explain how the parent's pre-consolidation investment income of $40,800 was determined Explain how the parent's December 31, 2016 pre-consolidation Equity Investment balance of $2,112,000 was determined For the year ended December 31, 2016, reconcile the parent company's pre-consolidation net income of $1,220,520 to the consolidated balance of $1,405,920 a. b. c