Assume a parent company acquired its subsidiary on January 1, 2018, at a purchase price that was $185,000 in excess of the book value of the subsidiarys Stockholders Equity on the acquisition date. Of that excess, $110,000 was assigned to a Customer List that is being amortized over a 10-year period. The remaining $75,000 was assigned to Goodwill. In January of 2021, the wholly owned subsidiary sold Equipment to the parent for a cash price of $60,000. The subsidiary had acquired the equipment at a cost of $70,000 and depreciated the equipment over its 10-year useful life using the straight-line method (no salvage value). The subsidiary had depreciated the equipment for 4 years at the time of sale. The parent retained the depreciation policy of the subsidiary and depreciated the equipment over its remaining 6-year useful life.

Following are financial statements of the parent and its subsidiary for the year ended December 31, 2022. The parent uses the equity method to account for its Equity Investment. The Customer List was amortized as part of the parents equity method accounting.

a. Compute the remaining portion of the deferred gain on January 1, 2022.

b. Show the computation to yield the $62,000 of Income (loss) from subsidiary reported by the parent for the year ended December 31, 2022.

c. Prepare the consolidation spreadsheet for the year ended December 31, 2022.

Book2 - Excel (Product Activation Failed) ? FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER A Microsoft account - Copy \begin{tabular}{lll|} \hline General \\ $%,%.00 \end{tabular} \begin{tabular}{|l|l|l|l|l|} \hline Normal & Bad & Good & Neutral & Calculation \\ \hline Check Cell & Explanatory... & Followed Hy... & Hyperlink & Input \\ \hline \hline \end{tabular} Clipboard Font Alignment Formatting Format as Styles B2 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline & \multirow[t]{2}{*}{ A } & B & & C & D & E & F & G & H & & J & K & L & M & N & O & P & Q & R & s & T & U & V & W & x \\ \hline 1 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 2 & & & & & & & Consolidatio & Entries & & & & & & & & & & & & & & & & & \\ \hline 3 & & & & Parent & Subsidiary & & Dr & & Cr & Consolidated & & & & & & & & & & & & & & & \\ \hline 4 & & Income Statement & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 5 & & Sales & $ & 4,000,000 & $600,000 & & & & & 4,600,000 & & & & & & & & & & & & & & & \\ \hline 6 & & Cost of goods sold & $ & (2,900,000) & $(350,000) & & & & & (3,250,000) & & & & & & & & & & & & & & & \\ \hline 7 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 8 & & Gross profit & $ & 1,100,000 & $250,000 & & & & & 1,350,000 & & & & & & & & & & & & & & & \\ \hline 9 & & Income (loss) from subsidiary & $ & 62,000 & $ & & $62,000 & & & $ & & & & & & & & & & & & & & & \\ \hline 10 & & Operating expenses & $ & (912,000) & $(180,000) & & & & & (1,092,000) & & & & & & & & & & & & & & & \\ \hline 11 & & Net income & $ & 250,000 & 70,000 & & & & & 258,000 & & & & & & & & & & & & & & & \\ \hline 12 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 13 & & Retained earnings statement: & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 14 & & BOY retained earnings & $ & 1,890,000 & $140,000 & & & & & 2,030,000 & & & & & & & & & & & & & & & \\ \hline 15 & & Net income & $ & 250,000 & 70,000 & & & & & 250,000 & & & & & & & & & & & & & & & \\ \hline 16 & & Dividends & $ & (140,000) & $(10,000) & & & & & (140,000) & & & & & & & & & & & & & & & \\ \hline 17 & & Ending retained earnings & $ & 2,000,000 & $200,000 & & & & & 2,140,000 & & & & & & & & & & & & & & & \\ \hline 18 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 19 & & Balance sheet: & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 20 & & Assets & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 21 & & Cash & $ & 275,000 & $160,000 & & & & & 435,000 & & & & & & & & & & & & & & & \\ \hline 22 & & Accounts receivable & $ & 350,000 & $215,000 & & & & & 565,000 & & & & & & & & & & & & & & & \\ \hline 23 & & Inventory & $ & 650,000 & $275,000 & & & & & 925,000 & & & & & & & & & & & & & & & \\ \hline 24 & & PPE, net & $ & 2,525,000 & $515,000 & & & & & 3,040,000 & & & & & & & & & & & & & & & \\ \hline 25 & & Equity investment & $ & 450,000 & - & & & & & $ & & & & & & & & & & & & & & & \\ \hline 26 & & Total assets & $ & 4,250,000 & $1,165,000 & & & & & 4,965,000 & & & & & & & & & & & & & & & \\ \hline 27 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 28 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 29 & & Liabilities and stockholders' equity & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 30 & & Accounts payable & $ & 325,000 & 83,000 & & & & & 408,000 & & & & & & & & & & & & & & & \\ \hline 31 & & Other current liabilities & $ & 400,000 & $100,000 & & & & & 500,000 & & & & & & & & & & & & & & & \\ \hline 32 & & Long-term liabilities & $ & 750,000 & $650,000 & & & & & 1,400,000 & & & & & & & & & & & & & & & \\ \hline 33 & & Common stock & $ & 275,000 & 57,000 & & & & & 332,000 & & & & & & & & & & & & & & & \\ \hline 34 & & APIC & $ & 500,000 & 75,000 & & & & & 575,000 & & & & & & & & & & & & & & & \\ \hline 35 & & EOY Retained earnings & $ & 2,000,000 & $200,000 & & & & & 2,200,000 & & & & & & & & & & & & & & & \\ \hline 36 & & Total liabilities and equity & $ & 4,250,000 & $1,165,000 & & & & & 5,415,000 & & & & & & & & & & & & & & & \\ \hline 37 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 38 & & & & & & & & & & & & & & & & & & & & & & & & & \\ \hline 9 & + & ab & & & & & & & & & & & & & & & & & & & & & & & \\ \hline \end{tabular}