consolidating

Mojito Corporation acquired 80% of the outstanding stock of Dulcinea, Inc., on January 1, 2016, for $1,950,000 in cash. The remaining 20% of Dulcinea's stock traded actively at the same price as Mojito paid. The book value of Dulcinea, Inc. at acquisition date was $1,865,000. One of Dulcinea's buildings, with a 14-year remaining life, was undervalued in the company's accounting records by $140,000. Also, Dulcinea's newly developed patent, with an estimated 10-year life, was assessed to have a fair value of $365,000. During subsequent years, Dulcinea reports the following: Net Income Dividends 2016 $225,000 $100,000 2017 $250,000 $110,000 2018 $295,000 $115,000 The following trial balances are for these two companies as of December 31, 2019. Mojito Dulcinea Debits Cash Receivables Inventory Investment in Dulcinea Land Buildings (net) Equipment (net) Operating expenses Dividends paid $370,000 530,000 750,000 2,327,200 670,000 835,000 350,000 450,000 245,000 $290,000 334,000 401,000 0 585,000 725,000 285,000 200,000 120,000 Total debits $6,527,200 $2,940,000 Credits Liabilities Common stock Additional paid-in capital Retained earnings, 1/1/19 Revenues Investment Income 285,000 750,000 1,660,250 2,730,150 879,000 222,800 105,000 40,000 410,000 1,860,000 525,000 0 Total Credits $6,527,200 $2,940,000 a. Prepare a consolidation worksheet for this business combination. b. Prepare the consolidating entry "*C that would have been required if Mojito had used the initial value method for accounting for its investment in Dulcinea. c. Prepare the consolidating entry "*C that would have been required if Mojito had used the partial equity method for accounting for its investment in Dulcinea. Mojito Corporation acquired 80% of the outstanding stock of Dulcinea, Inc., on January 1, 2016, for $1,950,000 in cash. The remaining 20% of Dulcinea's stock traded actively at the same price as Mojito paid. The book value of Dulcinea, Inc. at acquisition date was $1,865,000. One of Dulcinea's buildings, with a 14-year remaining life, was undervalued in the company's accounting records by $140,000. Also, Dulcinea's newly developed patent, with an estimated 10-year life, was assessed to have a fair value of $365,000. During subsequent years, Dulcinea reports the following: Net Income Dividends 2016 $225,000 $100,000 2017 $250,000 $110,000 2018 $295,000 $115,000 The following trial balances are for these two companies as of December 31, 2019. Mojito Dulcinea Debits Cash Receivables Inventory Investment in Dulcinea Land Buildings (net) Equipment (net) Operating expenses Dividends paid $370,000 530,000 750,000 2,327,200 670,000 835,000 350,000 450,000 245,000 $290,000 334,000 401,000 0 585,000 725,000 285,000 200,000 120,000 Total debits $6,527,200 $2,940,000 Credits Liabilities Common stock Additional paid-in capital Retained earnings, 1/1/19 Revenues Investment Income 285,000 750,000 1,660,250 2,730,150 879,000 222,800 105,000 40,000 410,000 1,860,000 525,000 0 Total Credits $6,527,200 $2,940,000 a. Prepare a consolidation worksheet for this business combination. b. Prepare the consolidating entry "*C that would have been required if Mojito had used the initial value method for accounting for its investment in Dulcinea. c. Prepare the consolidating entry "*C that would have been required if Mojito had used the partial equity method for accounting for its investment in Dulcinea