Canan Corporation paid $14,400 for a 80% interest in Kodak Corporation on January 1, 2020, when Kodak's stockholders equity consisted of 58.000 Capital Stock APICO $2,000 and $3,000 of Retained Earnings. The excess cost over book value was attributable to trademark, which has not been impaired since acquisition date. Additional information: 1. Canan sells merchandise to Kodak at 120% of Canan's cont. Durine 2020, Canan's sales to Kodak were 54,800, of which half of the merchandise remained in Kedak's inventory at December 31, 2020. (The 2020 ending Inventory was sold in 2021.) During 2021. Canan's sales to Kodak were $6.000 of which 60% remained in Kodak's Inventory at December 31, 2021. At year-end 2021. Kodak owed Cunan $4,000 for the inventory purchased during 2021. 2. Canan Corporation sold equipment with a book value of $2.000 and a remaining sett ute of four years and no talvepe value to Kodak Corporation on January 1, 2021 for $2,800. Straight line depreciation is used 3. During 2021. Kodek sold to Canan land for $50,000 that had a book value of $20,000. Canan still owns the land at 12/31/21 4. Separate company financial statements for Canan Corporation and Kodak at December 31, 2021 are summarized in the first two columns of the consolidation working papers. See Spreadsheet Tab. Required: Carefully Follow and label each step, Points 1. Prepare the acquisition analysis as of acquisition date. Compute the unamortized differential as of 1/1/2021. 10 15 2. Analyze each Intercompany transaction Label as either upstream downstream 3. SEPARATELY Calculate Net Income to the controlling Interest for the year 2021 20 20 4. Verify the calculation of the balance in the account equity in sub earnings and record the parent company entries with respect to its investment during 2021 5. Prepare all elimination entries for 2021 6. Complete the consolidating spreadsheet for the year ended 2021. 20 15 total 100 INCOME STATEMENT P CONS.TOT. S ELIMINATIONS Dr Cr 14,000 Sales Equity in sub earnings gain on sale of equip Gain on sale of land Total revenues 60,000 4,000 800 74,000 4,000 800 30,000 108,800 30,000 44,000 64,800 Cost of goods sold Expenses 26,000 28,000 4,400 3,600 30,400 31,600 54,000 10,800 8,000 36,000 Total expenses Total Net income Less net income to NCI Net Income to controlling interest 62,000 46,800 0 46,800 10,800 36,000 RETAINED EARNINGS STATEMENT 7,833 Retained Earnings 1/1 5,000 12,833 10,800 Net Income 36,000 46,800 7,000 Dividends declared 2,000 9.000 11,633 39,000 50,633 Retained Earnings 12/31 BALANCE SHEET 5,500 7,133 33,000 4,000 10,000 4,500 cash accts rec Dividends rec Inventory Other current assets Land Buildings, net Equipment, net Investment in S trademk 50,000 3,500 38,500 11,133 0 14,500 0 53,500 0 33,000 18,000 0 0 0 168,633 9,000 24,000 18,000 Total assets 114,633 54,000 53,000 5,000 50,000 8,000 Accounts payable Dividends payable Other liabilities Common stock Additional Paid-in capital Retained earnings noncontrolling interest Total liabilities and equity 2,000 39,000 58,000 0 0 58,000 2,000 50,633 0 168,633 TRUE 11,633 0 114,633 TRUE 54,000 TRUE Canan Corporation paid $14,400 for a 80% interest in Kodak Corporation on January 1, 2020, when Kodak's stockholders equity consisted of 58.000 Capital Stock APICO $2,000 and $3,000 of Retained Earnings. The excess cost over book value was attributable to trademark, which has not been impaired since acquisition date. Additional information: 1. Canan sells merchandise to Kodak at 120% of Canan's cont. Durine 2020, Canan's sales to Kodak were 54,800, of which half of the merchandise remained in Kedak's inventory at December 31, 2020. (The 2020 ending Inventory was sold in 2021.) During 2021. Canan's sales to Kodak were $6.000 of which 60% remained in Kodak's Inventory at December 31, 2021. At year-end 2021. Kodak owed Cunan $4,000 for the inventory purchased during 2021. 2. Canan Corporation sold equipment with a book value of $2.000 and a remaining sett ute of four years and no talvepe value to Kodak Corporation on January 1, 2021 for $2,800. Straight line depreciation is used 3. During 2021. Kodek sold to Canan land for $50,000 that had a book value of $20,000. Canan still owns the land at 12/31/21 4. Separate company financial statements for Canan Corporation and Kodak at December 31, 2021 are summarized in the first two columns of the consolidation working papers. See Spreadsheet Tab. Required: Carefully Follow and label each step, Points 1. Prepare the acquisition analysis as of acquisition date. Compute the unamortized differential as of 1/1/2021. 10 15 2. Analyze each Intercompany transaction Label as either upstream downstream 3. SEPARATELY Calculate Net Income to the controlling Interest for the year 2021 20 20 4. Verify the calculation of the balance in the account equity in sub earnings and record the parent company entries with respect to its investment during 2021 5. Prepare all elimination entries for 2021 6. Complete the consolidating spreadsheet for the year ended 2021. 20 15 total 100 INCOME STATEMENT P CONS.TOT. S ELIMINATIONS Dr Cr 14,000 Sales Equity in sub earnings gain on sale of equip Gain on sale of land Total revenues 60,000 4,000 800 74,000 4,000 800 30,000 108,800 30,000 44,000 64,800 Cost of goods sold Expenses 26,000 28,000 4,400 3,600 30,400 31,600 54,000 10,800 8,000 36,000 Total expenses Total Net income Less net income to NCI Net Income to controlling interest 62,000 46,800 0 46,800 10,800 36,000 RETAINED EARNINGS STATEMENT 7,833 Retained Earnings 1/1 5,000 12,833 10,800 Net Income 36,000 46,800 7,000 Dividends declared 2,000 9.000 11,633 39,000 50,633 Retained Earnings 12/31 BALANCE SHEET 5,500 7,133 33,000 4,000 10,000 4,500 cash accts rec Dividends rec Inventory Other current assets Land Buildings, net Equipment, net Investment in S trademk 50,000 3,500 38,500 11,133 0 14,500 0 53,500 0 33,000 18,000 0 0 0 168,633 9,000 24,000 18,000 Total assets 114,633 54,000 53,000 5,000 50,000 8,000 Accounts payable Dividends payable Other liabilities Common stock Additional Paid-in capital Retained earnings noncontrolling interest Total liabilities and equity 2,000 39,000 58,000 0 0 58,000 2,000 50,633 0 168,633 TRUE 11,633 0 114,633 TRUE 54,000 TRUE