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	$100,000	10
Customer list	150,000	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	$1,870,500		Assets
Cost of goods sold	(5,131,000)	(1,122,300)		Cash	$411,313	$131,511
Gross profit	2,199,000	748,200		Accounts receivable	938,240	433,956
Income (loss) from subsidiary	189,496			Inventory	1,422,020	557,409
Operating expenses	(1,392,700)	(486,330)		Equity investment	1,475,671
Net income	$995,796	261,870		Property, plant and equipment (PPE), net	5,374,356	1,280,669
					$9,621,600	$2,403,545
Statement of retained earnings:
BOY retained earnings	$3,682,592	$966,425		Liabilities and stockholders’ equity
Net income	995,796	261,870		Current liabilities	$1,053,321	$433,956
Dividends	(199,159)	(39,281)		Long-term liabilities	2,000,000	500,000
EOY retained earnings	$4,479,229	$1,189,014		Common stock	1,198,455	124,700
				APIC	890,595	155,875
				Retained earnings	4,479,229	1,189,014
					$9,621,600	$2,403,545

 Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders’ equity of the subsidiary.

Round answers to the nearest whole number.

Equity investment at 1/1/13:
Common stock	Answer
APIC	Answer
Retained earnings	Answer
AnswerCommon stockAPICRetained earningsUnamortized AAP	Answer
	Answer
Equity investment at 12/31/13:
Common stock	Answer
APIC	Answer
Retained earnings	Answer
AnswerCommon stockAPICRetained earningsUnamortized AAP	Answer
	Answer