Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $3,724,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiarys Stockholders Equity is assigned to a building (in PPE, net) that the parent believes is worth $100,000 more than its book value, an: unrecorded Patent that the parent valued at $200,000, and Goodwill of $300,000, 80% of which is allocated to the parent. The parent and the subsidiary report the balance sheets on the acquisition date in b. below:

a. Prepare the consolidation entries on the acquisition date.

Consolidation Worksheet
Description		Debit	Credit
[E]	Common stock	Answer	Answer
	APIC	Answer	Answer
	AnswerPPE, netPatentGoodwillEquity investmentCommon stockAPICRetained earningsNoncontrolling interest	Answer	Answer
	Equity investment	Answer	Answer
	AnswerPPE, netPatentGoodwillEquity investmentCommon stockAPICRetained earningsNoncontrolling interest	Answer	Answer
[A]	PPE, net	Answer	Answer
	Patent	Answer	Answer
	AnswerPPE, netPatentGoodwillEquity investmentCommon stockAPICRetained earningsNoncontrolling interest	Answer	Answer
	Equity investment	Answer	Answer
	AnswerPPE, netPatentGoodwillEquity investmentCommon stockAPICRetained earningsNoncontrolling interest	Answer	Answer

b. Prepare the consolidation spreadsheet on the acquisition date.

				Elimination Entries
	Parent	Subsidiary		Dr	Cr		Consolidated
Cash	$920,753	$215,152					Answer
Accounts receivable	725,760	331,296					Answer
Inventory	1,099,980	425,544					Answer
Equity investment	1,241,600				Answer	[E]	Answer
					Answer	[A]
Patent			[A]	Answer			Answer
Goodwill			[A]	Answer			Answer
PPE, net	5,291,244	787,304	[A]	Answer			Answer
Total Assets	$9,279,337	$1,759,296					Answer
Current liabilities	$814,779	$331,296					Answer
Long-term liabilities	4,000,000	476,000					Answer
Common stock	927,045	95,200	[E]	Answer			Answer
APIC	688,905	119,000	[E]	Answer			Answer
Noncontrolling interest					Answer	[E]	Answer
					Answer	[A]
Retained earnings	2,848,608	737,800	[E]	Answer			Answer
Total Liabilities and Equity	$9,279,337	$1,759,296		Answer	Answer		Answer