A. Parent pays $160,000 for its investment in subsidiary on 1 January 2020.

Determine Allocation and excess amortization schedules. Complete consolidation journal entries. Parent owns 100% of Subsidiary. The Fair Value of Subsidiarys assets at acquisition date are:

1. Trademarks: $46,000, indefinite life

2. Goodwill: [To be calculated]

3. Equipment: 175,000, with a 5 year life, straight line depreciation.

4. Patents: $80,000, with a 5 year

Complete the consolidation worksheet above.

B. With reference to Subsidiarys level of retained earnings relative to its other capital items, and the amount of retained earnings generated in the current period speculate about the type of business it might be.

C. Why do accounting standards require the consolidation of controlled entities?

Totals t t. t tt t Consolidation - entries Accounts: Parent: Subsidiary-Dr- Cr- Income Statement- Revenues- -200000 -130000.- Cost of Goods sold- 100000 51000.- Amortization expense 30000 20000.- Depreciation expense- 20000 9000.- Equity in subsidiary earn: -40000 Net income- -90000 -50000 0.- t S of Retained earnings + Retained earnings 1/1/20 Net income- Dividends declared- Retained earnings 12/31/20- -388600 -90000 50000 -50000.- -50000.- 20000.- 428600 -80000 Balance Sheet- Current assets- Investment in Subsidiary: 20000.- 53000 180000 O ttttttttt Trademarks Patents Equipment (net)- Goodwill- Total assets- 80000 46000.- 70000 55000.- 250000 150000.- 0.- 633000271000.- t -104400 -100000 -140000 -50000.- -1000 0 Liabilities: Common Stock- Additional paid-in capital Retained earnings 12/31/20- Total liabilities and Owners' equity- 428600 633000 -80000 -271000