Consolidation on Date of Acquisition-Equity Method with Non-controlling Interest and AAP

Assume that a parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000. The excess of the total fair value of the controlling and non-controlling interests over the book value of the subsidiarys stockholders equity is assigned to a building (in PPE-net) that is worth $100,000 more than its book value, an unrecorded patent that the parent valued at $200,000, and goodwill of $300,000. Goodwill is assigned proportionally to the controlling and non-controlling interests. Using the data below, you are to complete the consolidation worksheet by:

1. Entering the consolidation entries in the appropriate columns for the elimination entries [E], and the addition of the AAP amounts [A].

2. Preparing the consolidated balance sheet as it would appear after acquisition.

Parent Subsidiary Dr Cr Consolidated Cash Accounts receivable Inventory Equity investment 920,000 782,000 1,100,000 1,078,000 215,000 330,000 425,000 PPE, net Patent Goodwill Total assets 5,400,000 800,000 9,280,000 1,770,000 Current liabilities Long-term liabilities Common stock Additional paid-in capital Retained earnings Noncontrolling interest 810,000 4,000,000 920,000 700,000 2,850,000 330,000 500,000 90,000 120,000 730,000 Total liabilities and equity 9,280,000 1,770,000