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

A parent company acquired its 70% interest in its subsidiary on January 1, 2014. On the acquisition date, the total fair value of the controlling interest and the noncontrolling interest was $455,000 in excess of the book value of the subsidiarys Stockholders Equity. All of that excess was allocated to a Royalty Agreement, which had a zero book value in the subsidiarys financial statements (i.e., there is no Goodwill). The Royalty Agreement has a 7 year estimated remaining economic life on the acquisition date. Both companies use straight line amortization, with no terminal value.

In January 2017, the subsidiary sold Equipment to the parent for a cash price of $325,000. The subsidiary acquired the equipment at a cost of $624,000 and depreciated the equipment over its 10-year useful life using the straight-line method (no salvage value). The subsidiary had depreciated the equipment for 6 years at the time of sale. The parent retained the depreciation policy of the subsidiary and depreciated the equipment over its remaining 4 year useful life.

Following are pre-consolidation financial statements of the parent and its subsidiary for the year ended December 31, 2019. The parent uses the equity method to account for its Equity Investment.

	Parent	Subsidiary			Parent	Subsidiary
Income statement:				Balance sheet:
Sales	$4,420,000	$1,170,000		Assets
Cost of goods sold	(3,120,000)	(650,000)		Cash	$805,350	$325,000
Gross profit	1,300,000	520,000		Accounts receivable	689,000	546,000
Income (loss) from subsidiary	104,195			Inventory	1,170,000	715,000
Operating expenses	(678,600)	(325,000)		PPE, net	4,550,000	1,300,000
Net income	$725,595	$195,000		Equity investment	551,005
					$7,765,355	$2,886,000
Statement of retained earnings:
BOY retained earnings	$2,307,760	$260,000		Liabilities and stockholders equity
Net income	725,595	195,000		Accounts payable	$442,000	$325,000
				Other current liabilities	520,000	390,000
Dividends	(130,000)	(39,000)		Long-term liabilities	1,950,000	1,430,000
EOY retained earnings	$2,903,355	$416,000		Common stock	260,000	130,000
				APIC	1,690,000	195,000
				Retained earnings	2,903,355	416,000
					$7,765,355	$2,886,000

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