1. assume on january 1,2013 a parent company acquired a 75% interest in its subsidiary. the total fair value of the controlling and non controlling interests was 405,000 over the book value of tbe subsidiary stockhokder equity on the acquisition date. the parent assigned the excess to the following assets:

Patent- 270,000(initial fair value) 10 years(useful life)

goodwill- 135,000 (initial fair value) indefinite(useful life)

total for initial fair value - 405,000

75% of goodwill is allocated to the parent. the parent and the subsidiary report thd following pre-consolidated financial statement at december 31,2019.

P=Parent S=Subsidiary

income statement

sales- 6,300,000(P) 1,620,000(S)

COGS- -3,780,000(P) -900,000(S)

Gross Profit- 2,520,000(P) 180,000(S)

income(loss) from subsidiary- 114750(P)

operating expenses- -1,620,000(P) -540,000(S)

net income- 1,014,750(P) 180,000(S)

statement of retained earnings

begining retained earning- 1,473,250(p) 873,000(s)

net income- 1,014,750(p) 180,000(s)

dividends- -171,000(p) -90,000(s)

endjng retained earnings 2,317,000(p) 963,000(s)

balance sheet

cash- 270,000(p) 90,000(s)

accounts rexeivable- 540,000(p) 360,000(s)

inventory- 720,000(p) 792,000(s)

equity investment- 1,377,000(p)

PPE- 1,800,000(p) 1,080,000(s)

totals 4,707,000(p) 2,322,000(s)

current liabilities- 500,000(p) 162,000(s)

long term liabilities- 990,000(p) 540,000(s)

common stoxk- 540,000(p) 252,000(s)

APIC- 360,000(p) 405,000(s)

retained earnings- 2,317,000(p) 963,000(s)

totals 4,707,000(p) 2,322,000(s)

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A. disagregate and document the activity for 100% acquisition accounting premium, the controlling interest AAP, and the noncontrolling AAP.

B. calculate and organize the profits and losses on intercompany transactions and balances.

C. compute the pre-consolidation equity investment account begginging and ending balances starting with the stockholders equity of the subsidiary.

D. reconstruct the activity in the parents pre-consolidation Equity investment T-account for the year of consolidation

E. independently compute the owners equity attributable to the noncontrolling interest beginning and ending balances starting with the owners equity of the subsidiary.

F. independently calculate consolidated net income, controlling interest net income, and noncontrolling interest net income

G. complete the consolidating entries acording to fhe CEADI-sequenxe and complete the consolidation worksheet