Consolidation subsequent to date of acquisitionEquity method with noncontrolling interest, AAP, and upstream intercompany inventory sale

consolidation subsequent to date of acquisi Assume, on January 1, 2013, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over the book value of the subsidiaiys onEquity method with noncontrolling interest, AAP, and upstream intercompany inventory sale Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: [A] Asset lnitlalFaIrValue Useful Life Patent $180,000 10 years Goodwill 300,000 Indefinite $480,000 80% of the Goodwill is allocated to the parent. Assume the subsidiary sells inventory to the parent (upstream) which includes that inventory in products that it ultimately sells to customers outside of the controlled group You have compiled the following data as of 201 8 and 2019: 2018 Transfer price for inventory sale $500,000 $600,000 2019 Cost of goods sold (4200001 (450000! Gross profit $80,000 $150,000 % Inventory remaining Gross profit defer red $28,000 $37,500 EOV receivable/payable $80,000 $140,000 The inventoiy not remaining at the end of the year has been sold outside of the controlled group. The parent uses the equity method of pre-consolidation investment bookkeeping The parent and the subsidiary report the following pre-consolidation nancial statements at December 31, 2019: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $6,700,000 $2,500,000 Cash $500,000 $400,000 Cost of goods sold (4,500,000l (1,500,000) Accounts receivable 700,000 600,000 Gross profit 2,200,000 1,000,000 Inventory 900,000 800,000 Income (loss) from subSidiary 138,000 Equity investment 1,373,200 Operating expenses (2,000,000: (800,000) Property, plant and equipment (PPE), net 4,000,000 1,000,000 Net income $338,000 $200,000 $7,473,200 $2,800,000 Statement of retained earnings: BOY retained earnings $2,035,200 $940,000 Current liabilities $800,000 $500,000 Net income 338,000 200,000 Longrterm liabilities 3,000,000 900,000 DiVidends [200,000] [40,000) Common stock 500,000 100,000 EOV retained earnings $2,173,200 $1,100,000 APIC 1,000,000 200,000 Retained earnings 2,173,200 1,100,000 $7,473,200 $2,800,000 c. Compute the preconsolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Use a negative Sign with your answer to indicate a reduction to net income. Equity investment at \"1.119: 80% x book value of the net assets of subsidiary 992,000 V Add: Unamorb'zed MP v 297,600 v Less: 80% of upstream deferred intercompany prots v (22,400) v 1,267,200 v 0 0 Equity investment at 123i {19: 80% x book value of the net assets of subsidiary 96,000 x Add: Unamorb'zed MP v 283,200 v Less: 80% of upstream deferred intercompany prots v (30,000) v 473,200 X 0 0 e. Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Use a negative sign with your answer to indicate a reduction to net income. Noncontroiling interest at ill/19: 20% of book value of the net assets of subsidiary 248,000 v Add: Unamnr'b'zed MP 9 v 74,400 I Less: 20% of upstream deferred intercompany prots 3 V (5.600) J 316.800 V Noncontroiling interest at 12/31/19: 20% of book value of the net assets of subsidiary 220,000 x Add: Unamnr'b'zed MP 9 v 70,800 I Less: 20% of upstream deferred intercompany prots 3 V (7.500) J 283,300