Chapter 5 1. On 1/1/2016, Choco acquired 70% of Cake. Choco paid $700,000 and acquisition date fair value of non-controlling interest (NCI) is $300,000. On 1/1/2016, Choco allocated the entire $80,000 excess fair value over book value to adjust patented technology account (estimated remaining life of 10 years). During 2016, Choco sold goods to Cake for $200,000, which cost Choco $170,000. Cake still owns 50% of the goods at the end of 2016. Sales revenue for Choco is $1,200,000, and for Cake is $800,000 in 2016. Cost of goods sold for Choco is $700,000 and for Cake is $500,000 in 2016. Net income for Choco is $120,000 and for Cake is $70,000 in 2016. Cake declared $10,000 of dividends in 2016. Choco uses equity method to account for this investment a. Calculate 1) gross profit in percentage and 2) gross profit for remaining year-end inventory. 1. 300,000-170,000 = 270,000 b. What is the "equity in earnings of Cake" and "investment in Cake in 12/31/16? C. Prepare consolidation Entry TI ABC d. Prepare consolidation Entry G: e. What is the consolidated sales revenue for 2016? f. What is the consolidated cost of goods sold for 2016? g. What is the non-controlling interest's (NCI's) share of consolidated net income