Consolidations Review Problem: (20 points). Due on February 3, 2022 at 11:59 pm. Submitted on Canvas. (Typed) Always use the effective interest method. Penny purchased 80% of the outstanding common stock of Spice on 1/1/19 for $18.7 million in cash. Spice reported the following income and dividends for 2019 and 2020 (in 000's): Net Income Dividends 2019 2,000 500 The following are the fair value/book value amounts for Spice on 1/1/19 (in 000's): Cash Receivables Inventory (FIFO) Plant & Equipment Less: Accumulated Dem Patent Lease at below market rent Trademark Total Assets Accounts Payable Bond Payable Common stock Retained Earnings Total Liabilities & SHE Book Value 2020 4,000 1,500 Fair Values 600 600 1,500 1,500 1,200 1,900 10,000 12,000 3,000 4,000 1,000 400 $10,300 1069 003 901.997 1069.003 ? 5400 2929 $10,300 Each of the 1,000, $1,000 face bonds pays interest semi-annually on 6/30 and 12/31 and had 15 years until maturity at the Spice acquisition date. The bond was originally issued when the market rate was 6% with a coupon rate of 5%. On 1/1/19, the market rate was 3%. The plant & equipment had remaining useful lives of 5 years at 1/1/19 and the patent has a 10 year useful life at 1/1/19. Customer relationships estimated useful life is 4 years. Trademark has an indefinite life. The remaining lease term of the lease whose rent is below market is two years at 1/1/19. a. Prepare the required consolidation entries for this subsidiary for 2020. All numbers on the worksheet are in 000's. These should be neatly written on pages separately from the worksheet. Show all of your work in an organized, clear manner. b. Prepare the consolidated worksheet.