Consolidation worksheet for gain on constructive retirement of subsidiarys debt with no AAPEquity method Assume that a Parent company acquires a 80% interest in its Subsidiary on January 1, 2018. On the date of acquisition, the fair value of the 80 percent controlling interest was $768,000 and the fair value of the 20 percent noncontrolling interest was $192,000. On January 1, 2018, the book value of net assets equaled $960,000 and the fair value of the identifiable net assets equaled the book value of identifiable net assets (i.e., there was no AAP or Goodwill).

On December 31, 2019, the Subsidiary company issued $960,000 (face) 8 percent, five-year bonds to an unaffiliated company for $998,400. The bonds pay interest annually on December 31, and the bond premium is amortized using the straight-line method. This results in annual bond-payable premium amortization equal to $7,680 per year.

On December 31, 2021, the Parent paid $931,200 to purchase all of the outstanding Subsidiary company bonds. The bond discount is amortized using the straight-line method, which results in annual bond-investment discount amortization equal to $9,600 per year.

The Parent and the Subsidiary report the following financial statements for the year ended December 31, 2022:

				Parent		Subsidiary								Parent		Subsidiary
Income statement									Balance sheet
Sales				$5,400,000		$960,000			Assets
Cost of goods sold				(3,360,000)		(600,000)			Cash					$840,000		$480,000
Gross profit				2,040,000		360,000			Accounts receivable					1,020,000		720,000
Operating & other expenses				(1,680,000)		(175,200)			Inventories					1,080,000		960,000
Bond interest income				86,400		-			PPE, net					2,400,000		1,800,000
Bond interest expense						(69,120)			Equity investment					934,272		-
Income from subsidiary				75,264		-			Investment in bond (net)					940,800		-
Net income				$521,664		$115,680								$7,215,072		$3,960,000
Statement of retained earnings									Liabilities and stockholders' equity
BOY retained earnings				$1,893,408		$288,960			Accounts payable					$840,000		$540,000
Net income				521,664		115,680			Other current liabilities					1,080,000		780,000
Dividends				(240,000)		(48,000)			Bond payable (net)					-		975,360
Ending retained earnings				$2,175,072		$356,640			Other long-term liabilities					1,200,000		540,000
									Common stock					720,000		168,000
									APIC					1,200,000		600,000
									Retained earnings					2,175,072		356,640
														7,215,072		3,960,000

The parent uses the equity method of pre-consolidation investment bookkeeping. Provide the consolidation entries and prepare a consolidation worksheet for the year ended December 31, 2022.

Round answers to the nearest whole number.

Consolidation Journal
	Description	Debit	Credit
[C]	Equity income
	Income attributable to NCI
	Dividends-Subsidiary
	Investment in Subsidiary
	Noncontrolling Interest
[E]	Common Stock (Subsidiary)
	APIC (Subsidiary)
	BOY Retained earnings- SubsidiaryDividends
	Investment in Subsidiary
	Noncontrolling interest
[Ibond]	Bond payable (net)
	Interest Income
	Investment in bonds, Net
	Interest expense
	Investment in Subsidiary

Use negative signs with your answers in the Consolidated column for: Cost of goods sold, all expenses (inc. Total expenses), Income attributable to NCI and Dividends.