Consolidation subsequent to date of acquisitionEquity method with noncontrolling interest and AAP

Assume, on January 1, 2015, a parent company acquired a 90% interest in its subsidiary. The total fair value of the controlling and noncontrolling interest 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:

90% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2019:

a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP.

b. Calculate and organize the profits and losses on intercompany transactions and balances.

(No intercompany transactions)

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

d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation.

e. Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary.

f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Note:Use a negative sign with your answer to indicate a reduction to net income.

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).

Please Help!

Original Original [A] Asset Amount Useful Life Property, plant, and equipment $ 190,000 10 years Customer list 110,000 5 years Goodwill 200,000 Indefinite $ 500,000 Parent Parent Subsidiary Income statement: Sales Cost of goods sold Gross profit Equity income Operating expenses Net income Statement of retained earnings: Beginning retained earnings: Net income Dividends Ending retained earnings $5,760,000 (4,000,000) 1,760,000 134,100 (1,120,000) 774,100 Subsidiary Balance sheet: 1,550,000 Assets (960,000) Cash 590,000 Accounts receivable Inventory (400,000) Equity investment 190,000 Property, plant and equipment, net $ 400,000 $ 110,000 752,000 200,000 960,000 440,000 940,500 2,240,000 720,000 $5,292,500 $1,470,000 1,398,400 400,000 Liabilities and stockholders' equity 774,100 190,000 Accrued liabilities (160,000) (40,000) Long-term liabilities $2,012,500 $ 550,000 Common stock APIC Retained earnings 800,000 320,000 1,600,000 400,000 160,000 80,000 720,000 120,000 2,012,500 550,000 $5,292,500 $1,470,000 2015 Amort Unamort AAP 12/31/15 0 $ 0 $ 2016 Amort 2017 Amort Unamort AAP 12/31/16 0 $ 0 $ 0 0 Unamort 12/31/17 0 $ 0 $ 2018 Amort Unamort 01/15/15 $ 190,000 $ 110,000 200,000 $500,000 $ 2019 Amort 100% AAP Unamort AAP 12/31/18 0 $ $ 0 $ 0 0 Unamort AAP 12/31/19 0 $ 0 PPE, net 0 0 0 0 0 0 0 Customer list Goodwill 0 0 0 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Parent (p%): PPE, net Customer list Goodwill 0 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0 0 $ 0 $ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0 Subsidiary (nci%): PPE, net $ Customer list Goodwill 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0$ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Equity investment account at 1/1/19 p% book value of subsidiary's net assets $ Unamortized p% AAP 0 0 0 Equity investment account at 12/31/19 p% book value of subsidiary's net assets $ Unamortized p% AAP 0 0 0 Equity Investment 0 0 0 0 0 0 Noncontrolling interests at 1/1/19 nci% book value of subsidiary's net assets $ Unamortized nci% AAP 0 0 0 Noncontrolling interests at 12/31/19 nci% book value of subsidiary's net assets $ Unamortized nci% AAP 0 0 0 $ O 0 0 $ 0 $ 0 Parent's stand-alone net income Subsidiary's stand-alone net income 100% AAP amortization Consolidated net income Parent's stand-alone net income p% of subsidiary's stand-alone net income p% AAP amortization Consolidated net income attributable to the controlling interest nci% of subsidiary's stand-alone net income nci% AAP amortization Consolidated net income attributable to the noncontrolling interest $ 0 0 $ 0 $ 0 0 0 Consolidation Entries Dr Cr Parent Subsidiary Consolidated $ 0 0 0 $5,760,000 $1,550,000 (4,000,000) (960,000) 1,760,000 590,000 134,100 [C] (1,120,000) (400,000) [D] $774,100 $190,000 [C] 0 0 0 0 Income Statement: Sales Cost of Goods sold Gross profit Income (loss) from subsidiary Operating expenses Net Income Consolidated NI atrib to NCI Consolidated NI attrib to CI Statement of Ret Earnings: BOY retained earnings Net income Dividends EOY retained earnings 0 0 0 $ 0 0 $ 0 0 $1,398,400 774,100 (160,000) $2,012,500 $400,000 [E] 190,000 (40,000) $550,000 0 [C] 0 0 $ 0 Balance Sheet: Cash Accounts receivable Inventory Equity investment $400,000 752,000 960,000 940,500 $110,000 200,000 440,000 0 0 0 0 [C] 0 [E] 0 [A] O [D] 0 [D] 0 0 PPE, net Customer List Goodwill 0 0 0 0 $ 0 2,240,000 720,000 [A] [A] [A] $5,292,500 $1,470,000 $800,000 $320,000 1,600,000 400,000 160,000 80,000 [E] 720,000 120,000 [E] 2,012,500 550,000 0 0 0 Current liabilities Long-term liabilities Common stock APIC Retained earnings Noncontrolling interest 0 0 0 0 0 0 [C] 0 [E] O [A] 0 $5,292,500 $1,470,000 0 $ $ 0 Original Original [A] Asset Amount Useful Life Property, plant, and equipment $ 190,000 10 years Customer list 110,000 5 years Goodwill 200,000 Indefinite $ 500,000 Parent Parent Subsidiary Income statement: Sales Cost of goods sold Gross profit Equity income Operating expenses Net income Statement of retained earnings: Beginning retained earnings: Net income Dividends Ending retained earnings $5,760,000 (4,000,000) 1,760,000 134,100 (1,120,000) 774,100 Subsidiary Balance sheet: 1,550,000 Assets (960,000) Cash 590,000 Accounts receivable Inventory (400,000) Equity investment 190,000 Property, plant and equipment, net $ 400,000 $ 110,000 752,000 200,000 960,000 440,000 940,500 2,240,000 720,000 $5,292,500 $1,470,000 1,398,400 400,000 Liabilities and stockholders' equity 774,100 190,000 Accrued liabilities (160,000) (40,000) Long-term liabilities $2,012,500 $ 550,000 Common stock APIC Retained earnings 800,000 320,000 1,600,000 400,000 160,000 80,000 720,000 120,000 2,012,500 550,000 $5,292,500 $1,470,000 2015 Amort Unamort AAP 12/31/15 0 $ 0 $ 2016 Amort 2017 Amort Unamort AAP 12/31/16 0 $ 0 $ 0 0 Unamort 12/31/17 0 $ 0 $ 2018 Amort Unamort 01/15/15 $ 190,000 $ 110,000 200,000 $500,000 $ 2019 Amort 100% AAP Unamort AAP 12/31/18 0 $ $ 0 $ 0 0 Unamort AAP 12/31/19 0 $ 0 PPE, net 0 0 0 0 0 0 0 Customer list Goodwill 0 0 0 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Parent (p%): PPE, net Customer list Goodwill 0 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0 0 $ 0 $ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0 Subsidiary (nci%): PPE, net $ Customer list Goodwill 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0$ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Equity investment account at 1/1/19 p% book value of subsidiary's net assets $ Unamortized p% AAP 0 0 0 Equity investment account at 12/31/19 p% book value of subsidiary's net assets $ Unamortized p% AAP 0 0 0 Equity Investment 0 0 0 0 0 0 Noncontrolling interests at 1/1/19 nci% book value of subsidiary's net assets $ Unamortized nci% AAP 0 0 0 Noncontrolling interests at 12/31/19 nci% book value of subsidiary's net assets $ Unamortized nci% AAP 0 0 0 $ O 0 0 $ 0 $ 0 Parent's stand-alone net income Subsidiary's stand-alone net income 100% AAP amortization Consolidated net income Parent's stand-alone net income p% of subsidiary's stand-alone net income p% AAP amortization Consolidated net income attributable to the controlling interest nci% of subsidiary's stand-alone net income nci% AAP amortization Consolidated net income attributable to the noncontrolling interest $ 0 0 $ 0 $ 0 0 0 Consolidation Entries Dr Cr Parent Subsidiary Consolidated $ 0 0 0 $5,760,000 $1,550,000 (4,000,000) (960,000) 1,760,000 590,000 134,100 [C] (1,120,000) (400,000) [D] $774,100 $190,000 [C] 0 0 0 0 Income Statement: Sales Cost of Goods sold Gross profit Income (loss) from subsidiary Operating expenses Net Income Consolidated NI atrib to NCI Consolidated NI attrib to CI Statement of Ret Earnings: BOY retained earnings Net income Dividends EOY retained earnings 0 0 0 $ 0 0 $ 0 0 $1,398,400 774,100 (160,000) $2,012,500 $400,000 [E] 190,000 (40,000) $550,000 0 [C] 0 0 $ 0 Balance Sheet: Cash Accounts receivable Inventory Equity investment $400,000 752,000 960,000 940,500 $110,000 200,000 440,000 0 0 0 0 [C] 0 [E] 0 [A] O [D] 0 [D] 0 0 PPE, net Customer List Goodwill 0 0 0 0 $ 0 2,240,000 720,000 [A] [A] [A] $5,292,500 $1,470,000 $800,000 $320,000 1,600,000 400,000 160,000 80,000 [E] 720,000 120,000 [E] 2,012,500 550,000 0 0 0 Current liabilities Long-term liabilities Common stock APIC Retained earnings Noncontrolling interest 0 0 0 0 0 0 [C] 0 [E] O [A] 0 $5,292,500 $1,470,000 0 $ $ 0