Consolidation subsequent to date of acquisition$$Equity method with noncontrolling interest and AAP

Assume, on January $1,2018,$ a parent company acquired a $90\%$ interest in its subsidiary. The total fair value of the controlling and noncontrolling interest was $$660,000$ 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

Property, plant, and equipment $ $220,00010$ years

Customer list $132,0005$ years

Goodwill

$308,000$ Indefinite

$ $660,000$

$90\%$ of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre$-$consolidation financial statements at December $31,2022$:

Parent Subsidiary Parent Subsidiary

Income statement: Balance sheet:

Sales $$7,920,0002,090,000$ Assets

Cost of goods sold

$(5,500,000)$

$(1,320,000)$ Cash $ $550,000$ $ $110,000$

Gross profit $2,420,000770,000$ Accounts receivable $1,034,000275,000$

Equity income $154,440$ Inventory $1,320,000605,000$

Operating expenses $(1,540,000)(550,000)$ Equity investment $1,267,200$

Net income $1,034,440220,000$ Property, plant and equipment, net $3,080,000990,000$

Statement of retained earnings:

$ $7,521,200$

$ $1,980,000$

Beginning retained earnings: $1,926,760550,000$ Liabilities and stockholders' equity

Net income $1,034,440220,000$ Current liabilities $1,100,000440,000$

Dividends

$(220,000)$

$(55,000)$ Long$-$term liabilities $2,200,000550,000$

Ending retained earnings

$$2,741,200$

$ $715,000$ Common stock $220,000110,000$

APIC $990,000165,000$

Retained earnings

$2,741,200$

$715,000$

$ $7,251,200$

$$1,980,000$

f$.$ Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income.

Note: Use a negative signs with your answer to indicate a reduction to net income.

Parent's stand$-$alone net income

Answer $147$

Subsidiary's stand$-$alone net income

Answer $148$

$100\%$ AAP amortization

Answer $149$

Consolidated net income

Answer $150$

Parent's stand$-$alone net income

Answer $151$

p$\%$ of subsidiary's stand$-$alone net income

Answer $152$

p$\%$ AAP amortization

Answer $153$

Consolidated net income attributable to the controlling interest

Answer $154$

nci$\%$ of subsidiary's stand$-$alone net income

Answer $155$

nci$\%$ AAP amortization

Answer $156$

Consolidated net income attributable to the noncontrolling interest

Answer $157$

g$.$ Complete the complete the consolidation worksheet.

Note: Use negative signs with your answers in the Consolidated column when appropriate $($Cost of goods sold, Operating expenses and Dividends$).$

Consolidation Entries

Parent Subsidiary Dr Cr Consolidated

Income Statement:

Sales $$7,920,000$ $$2,090,000$

Answer $158$

Cost of Goods sold

$(5,500,000)$

$(1,320,000)$

Answer $159$

Gross profit $2,420,000770,000$

Answer $160$

Income $($loss$)$ from subsidiary $154,440[$C$]$

Answer $161$

Answer $162$

Operating expenses

$(1,540,000)$

$(550,000)[$D$]$

Answer $163$

Answer $164$

Net Income

$$1,034,440$

$$220,000$

Answer $165$

Consolidated NI atrib to NCI $[$C$]$

Answer $166$

Answer $167$

Consolidated NI attrib to CI

Answer $168$

Statement of Retained Earnings:

BOY retained earnings $$1,926,760$ $$550,000[$E$]$

Answer $169$

Answer $170$

Net income $1,034,440220,000$

Answer $171$

Dividends

$(220,000)$

$(55,000)$

Answer $172$

$[$C$]$

Answer $173$

EOY retained earnings

$$2,741,200$

$$715,000$

Answer $174$

Balance Sheet:

Cash $$550,000$ $$110,000$

Answer $175$

Accounts receivable $1,034,000275,000$

Answer $176$

Inventory $1,320,000605,000$

Answer $177$

Equity investment $1,267,200$

Answer $178$

$[$C$]$

Answer $179$

Answer $180$

$[$E$]$

Answer $181$

$[$A$]$

PPE, net $3,080,000990,000[$A$]$

Answer $182$

Answer $183$

$[$D$]$

Answer $184$

Customer List $[$A$]$

Answer $185$

Answer $186$

$[$D$]$

Answer $187$

Goodwill $[$A$]$

Answer $188$

Answer $189$

$$7,251,200$

$$1,980,000$

Answer $190$

Current liabilities $$,100,000$ $$440,000$

Answer $191$

Long$-$term liabilities $2,200,000550,000$

Answer $192$

Common stock $220,000110,000[$E$]$

Answer $193$

Answer $194$

APIC $990,000165,000[$E$]$

Answer $195$

Answer $196$

Retained earnings $2,741,200715,000$

Answer $197$

Noncontrolling interest

Answer $198$

$[$C$]$

Answer $199$

Answer $200$

$[$E$]$

Answer $201$

$[$A$]$

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