Consolidation Accounting

Facts:Parent Co paid $176,000 for 80% of the outstanding voting stock of Sub Co on January 1, 2018, when Sub Co's stockholders' equity consisted of $120,000 common stock and $60,000 retained earnings.This implied that the total fair value of Sub co is $220,000 ($176,000 / 80%).The company assigned the $40,000 excess fair value to previously unrecorded patents with a 10-year useful life.

Parent Co's $36,800 income from Sub Co for 2018 consisted of 80% of Sub Co's $50,000 net income less $3,200 ($40,000 / 10 year life * 80%) patent amortization.Parent Co's investment in subsidiary account at December 31, 2018 consisted of the following:

Investment in Sub Co

$176,000

Income from subsidiary

36,800

Less:Dividend from Sub Co

(24,000)

Investment in subsidiary

$188,800

Required:Using the Excel file "Case 1 - Advanced accounting topics" and the worksheet "Consolidation," show the required adjusting and eliminating journal entries (in journal entry form) and complete the worksheet, posting the journal entries to the worksheet and completing the Consolidated column with the totals.