Consolidation subsequent to date of acquisition - Equity method with noncontrolling interest and AAP Assume that, on January 1, 2009, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $500,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets:

[A] Asset Initial Fair Value Useful Life (years)

[A] Asset	Initial Fair Value	Useful Life (years)
Property, plant and equipment (PPE), net	$90,000	10
Customer list	160,000	10
Goodwill	250,000	Indefinite
	$500,000

80% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following financial statements at December 31, 2013:

	Parent	Subsidiary			Parent	Subsidiary
Income statement:				Balance sheet:
Sales	$7,330,000	$1,873,000		Assets
Cost of goods sold	(5,131,000)	(1,122,300)		Cash	$413,313	$134,011
Gross profit	2,199,000	750,700		Accounts receivable	938,240	433,956
Income (loss) from subsidiary	191,496			Inventory	1,422,020	557,409
Operating expenses	(1,392,700)	(486,330)		Equity investment	1,477,671
Net income	$997,796	264,370		Property, plant and equipment (PPE), net	5,374,356	1,280,669
					$9,625,600	$2,406,045
Statement of retained earnings:
BOY retained earnings	$3,682,592	$966,425		Liabilities and stockholders' equity
Net income	997,796	264,370		Current liabilities	$1,053,321	$433,956
Dividends	(199,159)	(39,281)		Long-term liabilities	2,000,000	500,000
EOY retained earnings	$4,481,229	$1,191,514		Common stock	1,198,455	124,700
				APIC	892,595	155,875
				Retained earnings	4,481,229	1,191,514
					$9,625,600	$2,406,045

g. Complete the consolidating entries according to the C-E-A-D-I sequence.

Consolidation Worksheet
Description		Debit	Credit
[C]	Equity income	Answer	Answer
	Consolidated net income attributable to noncontrolling interest	Answer	Answer
	Dividends	Answer	Answer
	Equity investment	Answer	Answer
	Noncontrolling interest	Answer	Answer
[E]	Common stock	Answer	Answer
	APIC	Answer	Answer
	Retained earnings	Answer	Answer
	Equity investment	Answer	Answer
	Noncontrolling interest	Answer	Answer
[A]	Property, plant and equipment (PPE), net	Answer	Answer
	Customer list	Answer	Answer
	Goodwill	Answer	Answer
	Equity investment	Answer	Answer
	Noncontrolling interest	Answer	Answer
[D]	Operating expenses	Answer	Answer
	Property, plant and equipment (PPE), net	Answer	Answer
	Customer list	Answer	Answer