Answer the questions in the document, answer is formatted at the end of the problem all you have to do is solve and put in numbers

4. Topic- Consolidation subsequent to date of acquisitionCost method with non-controlling interest, AAP, and upstream intercompany inventory sale LO 3: 35 Points Assume that, on January 1, 2010, a parent company acquired an 80% interest in a subsidiary for $889,600 in cash. The total fair value of the controlling and non-controlling interests on the acquisition date was $1,112,000 which is $440,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: [A]Asset Initial Fair Value Useful Life Patent Goodwill 160,000 280,000 440,000 10 years On the acquisition date, the retained earnings of the subsidiary were $400,000. The acquisition-date Goodwill is allocated to the parent and subsidiary in an 80:20 proportion, respectively. Assume that the subsidiary sells inventory to the parent (upstream) which includes that inventory in products that it ultimately sells to customers outside of the controlled group. You have compiled the following data as of 2015 and 2016 2015 Transfer price for inventory sale Cost of goods sold. Gross profit % Inventory remaining Gross profit deferred EOY receivable/payable 480,000 (400,000) 80,000 25% 20,000 56,000 2016 560,000 (464,000) 96,000 35% 33,600 96,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent uses the cost method of pre-consolidation investment bookkeeping. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2016: Parent Income Statement: Sales Cost of Goods sold Gross profit Income (loss) from subsidiary Operating expenses Net Income Consolidated NI attrib to NCI Consolidated NI attrib to CI Subsidiary 5,360,000 (3,600,000) 2,000,000 (1,200,000) 1,760,000 25,600 800,000 (1,600,000) (640,000) 185,600 160,000 Required: a. Compute the pre-consolidation Equity Investment account ending balances assuming that the parent company used the equity method instead of the cost method. For each of these computations, start with the stockholders' equity of the subsidiary. b. Compute the amount of the [ADJ] consolidating entry. c. Independently compute the owners' equity attributable to the noncontrolling interest ending balances starting with the owners' equity of the subsidiary. d. Complete the consolidating entries according to the C-E-A-D-I sequence Statement of Ret Earnings: BOY retained 1,441,000 800,000 earnings Net income 185,600 160,000 Dividends (160,000) (32,000) EOY retained 1,466,600 928,000 a. Equity Investment A/C at 12/31/16: earnings 80% x book value of the net assets of subsidiary Add: unamortized (80%) AAP Balance Sheet: Less: 80% of upstream deferred intercompany profits Cash 480,000 320,000 Accounts 640,000 480,000 receivable b. Computation of [ADJ] amount Inventory 80%800,000 of change in RE(S)640,000 from acquisition date through BOY Equity Less:889,600 Cum 80% AAP amort. from acquisition date through BOY investment Less: 80% of the BOY U-S unconf intercompany inventory profits [ADJ] Amount PPE, netc. Patent Goodwill 2,960,000 800,000 Noncontrolling interest at 12/31/16: 20% of book value of the net assets of subsidiary Add: 20% unamortized AAP Less: 10% of upstream deferred intercompany profits Current 703,000 400,000 liabilities d. Long-term 2,400,000 640,000 e. [ADJ] Equity Investment liabilities earnings of Parent - BOY Common stock 400,000 Retained112,000 APIC 800,000 160,000 Retained 1,466,600 928,000 earnings Noncontrolling interest [C] Equity investment income Consolidated Net Income attribute to noncontrolling interest Dividends Noncontrolling interest [E] Common stock (S) APIC (S) Retained earnings (S) Equity investment Noncontrolling interest [A] PPE, net Patent Equity investment Noncontrolling interest [D] Operating expenses Patent [Icogs] Equity Investment Noncontrolling interest Cost of Goods Sold [Isales] Sales Cost of Goods Sold [Icogs] Cost of Goods Sold Inventory [Ipay] Accounts Payable Accounts Receivable