Computer Project Problem using the Equity Method

The project should include:

Journal entries to be made on the books of Mission for 2018 regarding its investment in Valley.

Consolidation elimination entries for December 31, 2018

Consolidated financial statement worksheet for December 31, 2018

On January 1, 2017, Mission, Inc., acquired 100 percent of the common stock of Valley Company for $670,000 in cash and other fair-value consideration. Valleys fair value was allocated among its net assets as follows:

Fair value of consideration transferred for Valley		$670,000
Book value of Valley:
Common stock and Additional Paid-In Capital (APIC)	$130,000
Retained earnings	370,000	500,000
Excess fair value over book value to		170,000
Trademark (10-year remaining life)	$40,000
Existing technology (5-year remaining life)	80,000	120,000
Goodwill		$50,000

The December 31, 2018, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date):

	Mission	Valley
Revenues	$ (990,000)	$ (210,000)
Cost of goods sold	500,000	90,000
Depreciation expense	100,000	5,000
Amortization expense	55,000	18,000
Equity in subsidiary earnings	(77,000)	0
Net income	$ (412,000)	$ (97,000)
Retained earnings 1/1/18	$ (1,615,000)	$ (450,000)
Net income	(412,000)	(97,000)
Dividends declared	250,000	40,000
Retained earnings 12/31/18	$ (1,777,000)	$ (507,000)
Current assets	$ 960,000	$ 355,000
Investment in Valley	767,000
Equipment (net)	765,000	225,000
Trademark	235,000	100,000
Existing technology	0	45,000
Goodwill	450,000	0
Total assets	$ 3,177,000	$ 725,000