Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest, AAP, and upstream intercompany inventory sale Assume, on January 1, 2019, a parent company acquired an 85% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $625,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: This acquisition resulted in no recognized goodwill. 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 for the years ending 2021 and 2022; The inventory 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 financial statements at December 31,2022 : a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. b. Calculute and organize the profits and losses on intercompany transactions and balances. 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 owner' equity utributable 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. g. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet. Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest, AAP, and upstream intercompany inventory sale Assume, on January 1, 2019, a parent company acquired an 85% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $625,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: This acquisition resulted in no recognized goodwill. 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 for the years ending 2021 and 2022; The inventory 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 financial statements at December 31,2022 : a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. b. Calculute and organize the profits and losses on intercompany transactions and balances. 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 owner' equity utributable 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. g. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet
