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. Choco Co. acquired 60% of Allie Co. (60,000 shares) for $600,000 ( $10/share ) on December 31, 2018. The market value of Allies stock

. Choco Co. acquired 60% of Allie Co. (60,000 shares) for $600,000 ($10/share) on December 31, 2018. The market value of Allies stock was $9/share. Choco uses equity method for its internal reporting of investment in Allie.

12/31/2018

Choco Co.

Allie Co.

BV

BV

FV

Current assets

$868,000

$238,000

$238,000

Equipment [4 years]

364,000

280,000

360,000

Buildings [12 years]

574,000

210,000

270,000

Liabilities

$(546,000)

$(168,000)

$(168,000)

Common stock

(300,000)

(150,000)

Additional paid in capital

(460,000)

(350,000)

Retained earnings [12/31/18]

(500,000)

(60,000)

*note: numbers in this table in () refer to credit balance.

During 2019, Allie earned net income of $180,000, and paid dividends of $22,000.

1) Calculate goodwill and allocated calculated goodwill between controlling and noncontrolling interest (NCI) on 12/31/2018 (acquisition date)

  1. Calculate investment in Allie balance on 12/31/2019.

  1. Prepare consolidation entry A1 for consolidated financial statement ending 12/31/2019.

Accounts

Dr.

Cr.

  1. Prepare consolidation entry A2 for consolidated financial statement ending 12/31/2019.

Accounts

Dr.

Cr.

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