Comprehensive Problem: Differential Apportionment Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the following amounts: Item Debit Cash and Receivables $ 81,000 Inventory 260,000 Land 80,000 Credit 205,000 60,000 200,000 300,000 314,000 200,000 20,000 Debit $ 65,000 90,000 80,000 150,000 50,000 15,000 5,000 10,000 $465,000 Credit $105,000 20,000 50,000 100,000 90,000 100,000 $465,000 Buildings and Equipment Investment in Stanley Wood Products Stock Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Income from Subsidiary Additional Information 500,000 188,000 120,000 25,000 15,000 30,000 $1,299,000 $ Item Debit Cash Accounts Receivable Inventory 240,000 Land 80,000 Credit 155,000 70,000 200,000 300,000 290,000 700,000 45,000 Debit $ 25,000 55,000 100,000 20,000 150,000 250,000 15,000 75,000 20,000 $710,000 Credit $ 75,000 35,000 50,000 50,000 100,000 400,000 $710,000 Buildings and Equipment Investment in Granite Company Stock Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Subsidiary 500,000 202,000 500,000 25,000 75,000 50,000 $1,760,000 $ Master Corporation Stanley Wood Products Company Mortar Corporation Granite Company $ 38,000 50,000 $1,299,000 $1,760,000

Additional Information 1. On January 1, 20X7, Granite reported net assets with a book value of $150,000 and a fair value of $191,250. 2. Granites depreciable assets had an estimated economic life of 11 years on the date of combina- tion. The difference between fair value and book value of Granites net assets is related entirely to buildings and equipment. 3. Mortar used the equity method in accounting for its investment in Granite. 4. Detailed analysis of receivables and payables showed that Granite owed Mortar $16,000 on December 31, 20X7. 5. Assume that any goodwill impairment should be recorded as an adjustment in Mortars equity method accounts along with the amortization of other differential components. Required a. Give all journal entries recorded by Mortar with regard to its investment in Granite during 20X7. b. Give all eliminating entries needed to prepare a full set of consolidated financial statements for 20X7. c. Prepare a three-part consolidation worksheet as of December 31, 20X7.