Assume a parent company acquired a subsidiary on January 1, 2020. The purchase price was $1,148,000 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: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $336,000 12 years Patent 336,000 8 years License 224,000 10 years Goodwill 252,000 Indefinite $1,148,000 The [A] assets with definite useful lives have been depreciated or amortized as part of the parent's preconsolidation equity method accounting. The Goodwill asset has been tested annually for impairment, and has not been found to be impaired. The financial statements of the parent and its subsidiary for the year ended December 31, 2022, are as follows: Parent Subsidiary Parent Subsidiary Income statement Balance sheet Sales $6,720,000 $1,820,000 Assets Cost of goods sold (4,900,000) (1,083,600) Cash $1,008,000 $462,000 Gross profit 1,820,000 736,400 Accounts receivable 1,582,000 392,000 Equity income 168,000 - Inventory 2,030,000 700,000 Operating expenses (1,008,000) (476,000) Equity investment 2,520,000 - Net income $980,000 $260,400 Property, plant & equipment, net 4,060,000 1,092,000 Statement of retained earnings $11,200,000 $2,646,000 BOY retained earnings 2,240,000 952,000 Liabilities and stockholders' equity Net income 980,000 260,400 Accounts payable $1,064,000 $170,800 Dividends (504,000) (50,400) Accrued liabilities 1,176,000 224,000 Ending retained earnings $2,716,000 $1,162,000 Long-term liabilities 3,010,000 602,000 Common stock 854,000 266,000 APIC 2,380,000 221,200 Retained earnings 2,716,000 1,162,000 $11,200,000 $2,646,000 a. Compute the Equity Investment balance as of January 1, 2022. $Answer b. Show the computation to yield the $168,000 equity income reported by the parent for the year ended December 31, 2022. Do not use negative signs with your answers. Subsidiary net income Answer Less: Amortization Answer Less: Depreciation Answer Answer Answer c. Show the computation to yield the $2,520,000 Equity Investment account balance reported by the parent at December 31, 2022. Do not use negative signs with your answers. Equity investment at 1/1/22 Answer AnswerDividendsEquity incomeEquity investmentGoodwillOperating expensesPPE, netRetained earnings Answer AnswerDividendsEquity incomeEquity investmentGoodwillOperating expensesPPE, netRetained earnings Answer Answer Equity investment at 12/31/22 Answer d. Prepare the consolidation entries for the year ended December 31, 2022. Consolidation Journal Description Debit Credit [C] AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer Equity investment Answer Answer [E] Common Stock Answer Answer APIC Answer Answer AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer [A] PPE, net Answer Answer Patent Answer Answer Licenses Answer Answer AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer [D] AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer AnswerDividendsEquity incomeEquity investmentGoodwillNet incomeOperating expensesPPE, netRetained earnings Answer Answer Patent Answer Answer Licenses Answer Answer e. Prepare the consolidated spreadsheet for the year ended December 31, 2022. Use negative signs with answers in the Consolidated column for Cost of goods sold, Operating expenses and Dividends. Consolidation Worksheet Parent Subsidiary Debit Credit Consolidated Income statement Sales $6,720,000 $1,820,000 Answer Cost of goods sold (4,900,000) (1,083,600) Answer Gross profit 1,820,000 736,400 Answer Equity income 168,000 - [C] Answer Answer Operating expenses (1,008,000) (476,000) [D] Answer Answer Net income $980,000 $260,400 Answer Statement of retained earnings BOY retained earnings $2,240,000 $952,000 [E] Answer Answer Net income 980,000 260,400 Answer Dividends (504,000) (50,400) Answer [C] Answer Ending retained earnings $2,716,000 $1,162,000 Answer Balance sheet Assets Cash $1,008,000 $462,000 Answer Accounts receivable 1,582,000 392,000 Answer Inventory 2,030,000 700,000 Answer Equity investment 2,520,000 - Answer [C] Answer Answer [E] Answer [A] PPE, net 4,060,000 1,092,000 [A] Answer Answer [D] Answer Patent [A] Answer Answer [D] Answer Licenses [A] Answer Answer [D] Answer Goodwill - - [A] Answer Answer $11,200,000 $2,646,000 Answer Liabilities and equity Accounts payable $1,064,000 $170,800 Answer Accrued liabilities 1,176,000 224,000 Answer Long-term liabilities 3,010,000 602,000 Answer Common stock 854,000 266,000 [E] Answer Answer APIC 2,380,000 221,200 [E] Answer Answer Retained earnings 2,716,000 1,162,000 - - Answer $11,200,000 $2,646,000 Answer Answer Answe