Assume that a parent company acquired 100% of a subsidiary on 1/1/X1. The purchase price was $175,000 in excess of the subsidiarys book value of net assets on acquisition date and the excess was assigned entirely to an unrecorded patent. The life of the patent is 10 years. Assume the subsidiary sells inventory to the parent. The parent ultimately sells the inventory to outside customers. The following relates to the years X2 and X3:

Please complete the following using the spreadsheet below:

1) Prepare the consolidated financial statements at 12/31/X3 by placing the appropriate entries in their respective debit/credit column cells.

2) Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is a [C], [E], [A], [D] or [I]entry.

* Inventory Sales GP of unsold inventory Receivable (Payable) $103,300 $29,441 $41,320 $87,900 $19,137 $27,986 ACT470-Module 1-Option 1 DR Cr 1/1/xx Account Investment Cash 12/31/xx Investment Equity income Cash Investment Investment Account Balance: Amount 1/1/xx Balance Additions: Deductions: (express as negative) 12/31/xx Balance * Inventory Sales GP of unsold inventory Receivable (Payable) $103,300 $29,441 $41,320 $87,900 $19,137 $27,986 ACT470-Module 1-Option 1 DR Cr 1/1/xx Account Investment Cash 12/31/xx Investment Equity income Cash Investment Investment Account Balance: Amount 1/1/xx Balance Additions: Deductions: (express as negative) 12/31/xx Balance