Assume that on 1/1/xx, a parent company acquired 90% interest in a subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over book value. The parent assigned the excess to: PPE with a fair value of $160,000 and useful life of 20 years, Patent with a fair value of $80,000 and useful life of 10 years, Customer list with a fair value of $40,000 and useful life of 10 years, and Goodwill with a fair value of 200,000.

90% of the Goodwill is assigned to the Parent.

Using the spreadsheet:

• Prepare the consolidated financial statements at 12/31/xx 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]or [D] 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], and [D] entry cells in different shades.

Spreadsheet:

Consolidation Entries Dr Parent Subsidiary Consolidated 0 880,000 (528,000) 352,000 0 0 Income Statement: Sales Cost of Goods sold Gross profit Income (loss) from subsidiary Operating expenses Net Income Consolidated Nl attrib to NCI Consolidated Nl attrib to a 6,800,000 (5,200,000) 1,600,000 82,800 (1,280,000) 402,800 0 0 (240,000) 112,000 0 0 0 Statement of Ret Earnings: BOY retained earnings Net income Dividends EOY retained earnings 580,000 402,800 (160,000) 822,800 468,000 112,000 (16,000) 564,000 Oo olol Balance Sheet: Cash Accounts receivable Inventory Equity investment 320,000 480,000 720,000 982,800 228,000 200,000 264,000 OOOO 1,600,000 600,000 0 0 PPE, net Patent Customer List Goodwill 0 0 0 4,102,800 1,292,000 0 0 Current liabilities Long-term liabilities Common stock APIC Retained earnings Noncontrolling interest 720,000 1,600,000 320,000 640,000 822,800 200,000 400,000 56,000 72,000 564,000 0 0 0 0 4,102,800 1,292,000 0 0 Consolidation Entries Dr Parent Subsidiary Consolidated 0 880,000 (528,000) 352,000 0 0 Income Statement: Sales Cost of Goods sold Gross profit Income (loss) from subsidiary Operating expenses Net Income Consolidated Nl attrib to NCI Consolidated Nl attrib to a 6,800,000 (5,200,000) 1,600,000 82,800 (1,280,000) 402,800 0 0 (240,000) 112,000 0 0 0 Statement of Ret Earnings: BOY retained earnings Net income Dividends EOY retained earnings 580,000 402,800 (160,000) 822,800 468,000 112,000 (16,000) 564,000 Oo olol Balance Sheet: Cash Accounts receivable Inventory Equity investment 320,000 480,000 720,000 982,800 228,000 200,000 264,000 OOOO 1,600,000 600,000 0 0 PPE, net Patent Customer List Goodwill 0 0 0 4,102,800 1,292,000 0 0 Current liabilities Long-term liabilities Common stock APIC Retained earnings Noncontrolling interest 720,000 1,600,000 320,000 640,000 822,800 200,000 400,000 56,000 72,000 564,000 0 0 0 0 4,102,800 1,292,000 0 0