Assume that on 1/1/X0, a parent company acquires a 70% interest in its subsidiary for a price at $480,000 over book value. The excess is assigned as follows:

Asset	Fair Value	Useful Life
Patent	$320,000	8 years
Goodwill	160,000	Indefinite

70% of the goodwill is allocated to the parent.

Included in the attached Excel spreadsheet are the pre-consolidation financial statements for both the parent and the subsidiary.

• Prepare the consolidated financial statements at 12/31/X6 by placing the appropriate entries in their respective debit/credit column cells.
• 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.

Consolidation Entries Parent Subsidiary Dr Consolidated 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 6,000,000 2,000,000 ,000) 800,000 (4,000,000) (1,200 2,000,000 112,000 (1,500,000) 612,000 (600,000) 200,000 Statement of Ret Earnings: BOY retained earnings Net income Dividends EOY retained earnings 970,000 1,978,000 612,000 (190,000) 0 200,000 (100,000) 1,070,000 2,400,000 1,07 0 Balance Sheet: Cash Accounts receivable nventory Equity investment 200,000 600,000 800,000 1,400,000 120,000 400,000 880,000 PPE, net Patent Goodwill 2,000,000 1,200,000 5,000,00 2,600,000 0 Current liabilities Long-term liabilities Common stock 500,000 200,000 1,100,000 600,000 600,000 280,000 APIC Retained earnings Noncontrolling interest 450,000 2,400,000 1,070,000 400,000 5,000,000 2,600,000