Consolidation several years subsequent to date of acquisition--Equity method Assume a parent company acquired a subsidiary on January 1, 2017. The purchase price was $820,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following (Al assets: Original Original Useful JA Asset Amount Life Property, plant and equipment PPE.net 240.000 12 years Patent 240,000 years 160.000 10 years 180.000 de Good The Il assets with definite useful lives have been depreciated or amortized as part of the parent's preconsolidation equity method accounting. The Goodwill asset has been tested annually for impairment, and has not been found to be impaired. The financial statements of the parent and its subsidiary for the year ended December 31, 2019, are as follows: Parent Subsidiary Parent Subsidiary Income statement Balance sheet Sales $4,800,000 $1,300,000 Assets Cost of goods sold (3,500,000) (774,000) Cash Gross profit 1,300,000 526,000 Accounts receivable Equity income 120,000 Inventory Operating expenses (720,000) (340,000) Equity investment Net income $700,000 $186,000 Property, plant & equipment, net Statement of retained earnings BOY retained earnings 1,600,000 680,000 Liabilities and stockholders' equity Net income 700,000 186,000 Accounts payable Dividends (360,000) (36,000) Accrued liabilities Ending retained earnings $1,940,000 $830,000 Long-term liabilities Common stock APIC Retained earnings $720,000 $330,000 1,130,000 280,000 1,450,000 500,000 1,800,000 2,900,000 780,000 $8,000,000 $1,890,000 $760,000 $122,000 840,000 160,000 2,150,000 430,000 610,000 190,000 1,700,000 158,000 1,940,000 830,000 $8,000,000 $1,890,000 a. Compute the Equity Investment balance as of January 1, 2019. $0 My Sub b. Show the computation to yield the $120,000 equity income reported by the parent for the year ended December 31, 2019. Do not use negative signs with your answers. Subsidiary net income Less Amortization Les Depreciation 0 0 0 Show the computation to yield the $1,800,000 Equity Investment account balance reported by the parent at December 31, 2019, Do not use negative signs with your answers. 0 Euty investment at 11/16 . 0 fuity investment at 12/31/16 d. Prepare the consolidation entries for the year ended December 31, 2019. Consolidation Journal Description Debit Credit [C 0 0 0 0 0 0 Equity investment [E] Common Stock APIC 0 0 0 0