bod (includes price was date, and the into consideration the procedures in bochum 54 Consolidation oral years absequent to date of acquisition-Equity method impairment of Goodwill Asume a parent company acquired a subsidiary on January 1, 2015. The purchase in excess of the subsidiary's book value of Stockholdersb y on the acquisition date was assigned to the following (Alasses Original Original Amount Useful $360,000 Al Asset 500,000 Indefine $860,000 Goodwill of the parent's for men The [A]assets with definite useful lives have been depreciated or amortized as part of the consolidation equity method accounting. The Goodwill asset has been tested annually for in and has not been found to be impaired The financial statements of the parent and its subsidiary for the year ended December 31 as follows: 31.2019 Parent Subsidiary Parent Subsidiary $ Income statement: ........ $6.000.000 Cost of goods sold....... (4,700.000) Gross profit. ............... 1.300.000 Equity income.............. 340.000 Operating expenses.... (980.000) Net Income $ 660,000 $3.000.000 (1.800,000) 1.200.000 300.000 Balance sheet: Assets Cash Accounts receivable.. Inventory Equity investment. Property, plant and equipment (PPE), net... $ 550,000 1,100,000 1,600,000 2,810.000 4,540,000 $10,600,000 800,000 900,000 (800.000) $ 400,000 1,700,000 $3,700,000 Statement of retained earnings: Beginning retained earnings... $2.990.000 Net income. 660.000 Dividends ............ ..... 250,000) Ending retained earnings ..... $3,400,000 $1,464,000 400.000 (64,000) $1,800.000 $200,000 Liabilities and stockholders' equity Accounts payable... Accrued liabilities... Long-term liabilities... Common stock.. APIC Retained earings 300.000 950.000 $ 980,000 1.150,000 3,000,000 570,000 1,500,000 3,400,000 $10.500,000 200.000 250,000 1,800,000 $3,700,000 a Compute the Equity Investment balance as of January 1. 2019. b. Show the computation to yield the $340,000 of Equity Income reported by the parent for the year ended December 31, 2019 c. Show the computation to yield the $2,810,000 Equity Investment account balance reported by the parent at December 31, 2019. d. Prepare the consolidation entries for the year ended December 31, 2019 c. Prepare the consolidation spreadsheet for the year ended December 31, 2019 f. Now, assume, prior to the issuance of the consolidated financial statements prepared in part (C). you perform an annual test for potential impairment of Goodwill. You decide to forego the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying value of the reporting unit. The fair value of the subsidiary is $2.5 million and the fair value of the identifiable net assets (other than Goodwill) is $2.4 million. Also, assume your company previously adopted Accounting Standards Update 2017-04: Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. Conduct your test for potential impairment of Goodwill, and prepare any required journal entry as a result of that test. than www is $2.4 mi) is $2.5 miless than the mine whe se fairing varit is y as a Your les federill and company of the ide the repory aking uludeni Subsequent to the Date of Acquisition Prepare the consolidated balance sheet on December 31, 2019 and the consolidated income statement and consolidated statement of retained earnings for the year then ended after taking into consideration the procedures in both parts (e) and (). 5. Consolidation several years subsequent to date of acquisition Equity method Assume a parent company acquired a suheidi 86000 bod (includes price was date, and the into consideration the procedures in bochum 54 Consolidation oral years absequent to date of acquisition-Equity method impairment of Goodwill Asume a parent company acquired a subsidiary on January 1, 2015. The purchase in excess of the subsidiary's book value of Stockholdersb y on the acquisition date was assigned to the following (Alasses Original Original Amount Useful $360,000 Al Asset 500,000 Indefine $860,000 Goodwill of the parent's for men The [A]assets with definite useful lives have been depreciated or amortized as part of the consolidation equity method accounting. The Goodwill asset has been tested annually for in and has not been found to be impaired The financial statements of the parent and its subsidiary for the year ended December 31 as follows: 31.2019 Parent Subsidiary Parent Subsidiary $ Income statement: ........ $6.000.000 Cost of goods sold....... (4,700.000) Gross profit. ............... 1.300.000 Equity income.............. 340.000 Operating expenses.... (980.000) Net Income $ 660,000 $3.000.000 (1.800,000) 1.200.000 300.000 Balance sheet: Assets Cash Accounts receivable.. Inventory Equity investment. Property, plant and equipment (PPE), net... $ 550,000 1,100,000 1,600,000 2,810.000 4,540,000 $10,600,000 800,000 900,000 (800.000) $ 400,000 1,700,000 $3,700,000 Statement of retained earnings: Beginning retained earnings... $2.990.000 Net income. 660.000 Dividends ............ ..... 250,000) Ending retained earnings ..... $3,400,000 $1,464,000 400.000 (64,000) $1,800.000 $200,000 Liabilities and stockholders' equity Accounts payable... Accrued liabilities... Long-term liabilities... Common stock.. APIC Retained earings 300.000 950.000 $ 980,000 1.150,000 3,000,000 570,000 1,500,000 3,400,000 $10.500,000 200.000 250,000 1,800,000 $3,700,000 a Compute the Equity Investment balance as of January 1. 2019. b. Show the computation to yield the $340,000 of Equity Income reported by the parent for the year ended December 31, 2019 c. Show the computation to yield the $2,810,000 Equity Investment account balance reported by the parent at December 31, 2019. d. Prepare the consolidation entries for the year ended December 31, 2019 c. Prepare the consolidation spreadsheet for the year ended December 31, 2019 f. Now, assume, prior to the issuance of the consolidated financial statements prepared in part (C). you perform an annual test for potential impairment of Goodwill. You decide to forego the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying value of the reporting unit. The fair value of the subsidiary is $2.5 million and the fair value of the identifiable net assets (other than Goodwill) is $2.4 million. Also, assume your company previously adopted Accounting Standards Update 2017-04: Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. Conduct your test for potential impairment of Goodwill, and prepare any required journal entry as a result of that test. than www is $2.4 mi) is $2.5 miless than the mine whe se fairing varit is y as a Your les federill and company of the ide the repory aking uludeni Subsequent to the Date of Acquisition Prepare the consolidated balance sheet on December 31, 2019 and the consolidated income statement and consolidated statement of retained earnings for the year then ended after taking into consideration the procedures in both parts (e) and (). 5. Consolidation several years subsequent to date of acquisition Equity method Assume a parent company acquired a suheidi 86000