Consolidation Problem (50 points)

On January 1, 2013, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander's book value was $925,000, Plymouth assessed Sander's total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock.

The book values of Sander's individual assets and liabilities approximated their acquisition-date fair values except for the patent account, which was undervalued by $350,000. The undervalued patents had a 5-year remaining life at the acquisition date. Any remaining excess fair value was attributed to goodwill. No goodwill impairments have occurred.

Sander regularly sells inventory to Plymouth. Below are details of the intra-entity inventory sales for the past three years:

At year end, there are no intra-entity payables or receivables. Separate financial statements for these two companies as of December 31, 2015, follow:

	Required:
	Prepare Plymouths acquisition-date fair-value allocation schedule for its investment in Sander.
	The parent reports Equity in earnings of Sander of $124,000 for 2015. Show how this figure was calculated.
	Calculate the amount of net income to be allocated to the noncontrolling interest.
	Prepare all the consolidation entries necessary at December 31, 2015.
	On the template provided on the next page, prepare a worksheet for Plymouth and Sander for the year ending December 31, 2015.