1. Consolidation on date of acquisitionNoncontrolling interest and AAP.

Assume a parent company acquires a 75% interest in its subsidiary for a purchase price of $1,097,250. 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 is worth $104,500 more than its book value, an unrecorded patent with a fair value of $171,000, and Goodwill of $294,500. There is no control premium, so goodwill is assigned proportionally to the controlling and noncontrolling interests. The parent and the subsidiary report the following pre-consolidation balance sheets on the acquisition date:

1. Prepare the [E] and [A] consolidation entries on the acquisition date.

B) Prepare the consolidation spreadsheet on the acquisition date.

	Parent	Subsidiary		Dr	Cr		Consolidated
Cash	855,000	190,000
Accounts receivable	742,900	313,500
Inventory	1,045,000	403,750
Equity investment	1,097,250
PPE, net	3,800,000	760,000
Patent
Goodwill
Total assets	7,540,150	1,667,250
Current liabilities	760,000	299,250
Long-term liabilities	2,850,000	475,000
Common stock	855,000	85,500
Additional paid-in capital	665,000	114,000
Retained earnings	2,410,150	693,500
Noncontrolling interest
Total liabilities and equity	7,540,150	1,667,250

\begin{tabular}{|c|c|c|c|c|c|} \hline & Parent & Subsidiary & & Parent & Subsidiary \\ \hline Cash. & $855,000 & $190,000 & Current liabilities. & $760,000 & $299,250 \\ \hline Accounts receivable & 742,900 & 313,500 & Long-term liabilities & 2,850,000 & 475,000 \\ \hline Inventory. & 1,045,000 & 403,750 & Common stock & 855,000 & 85,500 \\ \hline Equity investment & 1,097,250 & & Additional paid-in capital. & 665,000 & 114,000 \\ \hline Property, plant, and equipment, net & 3,800,000 & 760,000 & Retained earnings. & 2,410,150 & 693,500 \\ \hline Total assets. & $7,540,150 & $1,667,250 & Total liabilities and equity . . . . & $7,540,150 & $1,667,250 \\ \hline \end{tabular}