A parent company acquired 80% of the stock of a subsidiary company on January 1, 2XX1, for $751,140. On this date, the balances of the subsidiarys stockholders equity accounts were Common Stock, $468,000, and Retained Earnings, $93,600. On January 1, 2XX1, the market value for the 20% of shares not purchased by the parent was $184,860.

On January 1, 2XX1, the subsidiarys recorded book values were equal to fair values for all items except four: (1) buildings and equipment, net had a book value of $195,000 and a fair value of $265,200, and (2) the licenses intangible asset had a book value of $136,500 and a fair value of $300,300. On the acquisition date, the subsidiarys buildings and equipment, net had a remaining useful life of 6 years and licenses had a remaining useful life of 7 years.

On January 1, 2XX4, the parent sold a building to the subsidiary for $312,000. On this date, the building was carried on the parents books (net of accumulated depreciation) at $253,500. Both companies estimated that the building has a remaining life of 6 years on the intercompany sale date, with no salvage value.

Each company routinely sells merchandise to the other company, with a profit margin of 25 percent of selling price (regardless of the direction of the sale). During 2XX5, intercompany sales amount to $58,500, of which $31,200 of merchandise remains in the ending inventory of the parent. On December 31, 2XX5, $15,600 of these intercompany sales remained unpaid. Additionally, the subsidiarys December 31, 2XX4 inventory includes $46,800 of merchandise purchased in the preceding year from the parent. During 2XX4, intercompany sales amount to $78,000, and on December 31, 2XX4, $23,400 of these intercompany sales remained unpaid.

The parent accounts for its Equity Investment in the subsidiary using the equity method. The pre-consolidation financial statements for the two companies for the year ended December 31, 2XX5, are provided below:

	Parent	Subsidiary			Parent	Subsidiary
Income statement:				Balance sheet:
Sales	$1,950,000	$780,000		Cash	$175,500	$97,500
Cost of goods sold	(1,014,000)	(499,200)		Accounts receivable	210,600	187,200
Gross profit	936,000	280,800		Inventories	507,000	179,400
Depreciation & amort. expense	(46,800)	(39,000)		Buildings and equipment, net	491,400	351,000
Operating expenses	(604,500)	(148,200)		Other assets	222,300	390,000
Interest expense	(23,400)	(7,800)		Licenses	0	39,000
Total expenses	(674,700)	(195,000)		Investment in subsidiary	914,940	0
Income (loss) from subsidiary	55,770	-		Total assets	$2,521,740	$1,244,100
Net income	$317,070	$85,800
Statement of retained earnings:				Accounts payable	$136,500	$58,500
Beginning retained earnings	$1,046,370	$503,100		Notes payable	195,000	85,800
Net income	317,070	85,800		Other liabilities	85,800	101,400
Dividends declared	(234,000)	(58,500)		Common stock	975,000	468,000
Ending retained earnings	$1,129,440	$530,400		Retained earnings	1,129,440	530,400
				Total liabilities and equity	$2,521,740	$1,244,100

Required: a. Compute the EOY noncontrolling interest equity balance

b. Prepare the consolidation income statement. Use negatives as appropriate.