Check my work 5 On January 1, 2020, Mcilroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $346,200. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $204,600. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $230,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $79,900 and an unrecorded customer list (15-year remaining life) assessed at a $55,800 fair value. Any remaining excess points acquisition-date fair value was assigned to goodwill. Since acquisition, Mcilroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. eBook Intra-entity inventory sales between the two companies have been made as follows: Transfer Price Ending Balance Year Cost to Mcilroy to Stinson (at transfer price) Print 2020 $ 129, 000 $161, 250 $53, 750 2021 112, 800 150, 400 37 , 600 References The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: Stinson, Mcilroy, Inc. Inc Sales $ (738, 000) $ (371, 000) Cost of goods sold 485 , 000 226, 600 Operating expenses 198 , 860 77, 200 Equity in earnings in Stinson (34, 644) 0 Net income $ (88, 784) $ (67, 200) Retained earnings, 1/1/21 $ (789, 600) (283, 300) Net income (88, 784) (67, 200) Dividends declared 18, 600 9 , 100 Retained earnings, 12/31/21 $ (829, 784) $ (331, 400) Cash and receivables $ 282, 900 $ 150, 900 Inventory 265, 700 131, 500 Investment in Stinson 398 , 828 0 Buildings (net) 343 , 000 205, 700 Equipment (net) 244, 900 89 , 600 Patents (net) 24, 400 Total assets $ 1, 535, 328 $ 602, 100 Liabilities $ (405, 544) (170, 700) Common stock (300, 000 ) 100, 000) Retained earnings, 12/31/21 829, 784) 331 , 400) Total liabilities and equities $ (1, 535, 328 $ (602, 100)