Alice Technology Inc. (ATI) acquired all of the voting stock of Northern Outsourcing Corporation (NOC) on June 30, 2018, for $110 million in cash and stock, plus an earnings contingency payable at the end of the third year with a fair value of $2 million at the date of acquisition. Within the measurement period, the earnings contingency declined to a fair value of zero and the acquisition price was appropriately adjusted. Both companies have a June 30 year-end.

At June 30, 2018, NOCs total shareholders equity was $40 million, as follows (in millions):

Common stock, par	$ 4
Additional paid-in capital	60
Retained earnings (deficit)	(25)
Accumulated other comprehensive income	3
Treasury stock	(2)
Total	$40

At the acquisition date, NOCs inventories were undervalued by $5 million, its property, plant and equipment was overvalued by $60 million, its reported patents and trademarks were undervalued by $10 million, and its long-term debt was undervalued by $3 million. NOC also had previously unreported identifiable intangibles: $5 million of advanced technology and $25 million of customer lists. NOC reports its inventory using the LIFO method, and purchases exceed sales every year. The acquisition date remaining lives of its assets and liabilities are as follows:

Property, plant and equipment, net	20 years
Patents and trademarks	5 years
Advanced technology	5 years
Customer lists	Indefinite
Long-term debt	3 years

The straight-line method is used for limited-life assets. Impairment losses on the customer lists were $2 million in fiscal 2020 and $4 million in fiscal 2021. Goodwill impairment losses were $2 million in fiscal 2019, $3 million in fiscal 2020, and $2 million in fiscal 2021.

NOC reported net income of $15 million in fiscal 2019, and a net loss of $2 million in fiscal 2020. Neither company pays dividends. ATI uses the complete equity method to account for its investment in NOC on its own books. The trial balances of ATI and NOC at June 30, 2021, are as follows:

Current assets	$ 232	$ 12
Property, plant and equipment, net	600	140
Identifiable intangible assets	1,100	30
Investment in GOC	127	--
Current liabilities	(175)	(10)
Long-term liabilities	(1,125)	(105)
Common stock, par	(22)	(4)
Additional paid-in capital	(580)	(60)
Retained earnings, July 1	(118)	12
Accumulated other comprehensive income, July 1	(16)	(4)
Treasury stock	8	2
Sales revenue	(2,000)	(900)
Equity in net income of GOC	(7)	--
Equity in OCI of GOC	(1)	--
Cost of goods sold	1,400	800
Operating expenses	580	88
Other comprehensive income	(3)	(1)
Totals	$ 0	$ 0

1. Prepare a schedule that computes the June 30, 2021, investment in NOC balance and 2021 equity in net income on ATIs books.

2.Use a working paper to consolidate the trial balances of ATI and NOC at June 30, 2021.

3.Present the consolidated balance sheet at June 30, 2021, and the consolidated statement of comprehensive income for 2021.