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.

Above are the pre-consolidation financial statements for both the parent and the subsidiary.

Requirements:

• 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.
• Use Excel formulas to derive the Consolidated column amounts and totals.
• Using the "Home" key in Excel, go to the "Styles" area and highlight the [C], [E], [A], [D] or [I]entry cells in different shades.

ACT470-Portfolio-Option 1 Consolidation Entries Dr Parent Subsidiary Cr Consolidated 2,000,000 (1,200,000) 800,000 Income Statement: Sales Cost of Goods sold Gross profit Income (loss) from subsidiary Operating expenses Net Income Consolidated NI attrib to NCI Consolidated Nl attrib to cl 6,000,000 (4,000,000) 2,000,000 112,000 (1,500,000) 612,000 O olololo (600,000) 200,000 0 0 0 Statement of Ret Earnings: BOY retained earnings Net income Dividends EOY retained earnings 0 1,978,000 612,000 (190,000) 2,400,000 970,000 200,000 (100,000) 1,070,000 OO Balance Sheet: Cash Accounts receivable Inventory Equity investment 200,000 600,000 800,000 1,400,000 120,000 400,000 880,000 OOO 0 2,000,000 1,200,000 0 PPE, net Patent Goodwill 0 0 5,000,000 2,600,000 0 0 0 Current liabilities Long-term liabilities Common stock APIC Retained earnings Noncontrolling interest 500,000 1,100,000 600,000 400,000 2,400,000 200,000 600,000 280,000 450,000 1,070,000 0 0 0 0 5,000,000 2,600,000 0 0 0