Feustel Company acquired 80 of Schmitt Company on January 1, 2016 for $1,500,000 The FV of the non controlling interests at the acquisition date was 260,000 The book value of Schmitts equity was $1,000,000 at the time Feustel uses the equity method to account for its investment in Star The excess investment cost over book value was allocated as follows Building (10 year life) $150,000 Patent (7 year life) 112,000 Goodwill 498,000 Total $760,000 On December 31, 2017 , Schmitt sold equipment to Feustel for $125,000 The equipment had a cost of 125,000 and accumulated depreciation of 75,000 The remaining life of the equipment was estimated at 5 years upstream Feustel regularly sells inventory to Schmitt downstream Schmitt includes that inventory in the products that it ultimately sells to customers outside of the consolidated group The following table shows the inventory sales information for the years ending 2018 and 2019 2018 2019 Transfer price for inventory sale $70,000 $100,000 Cost of goods sold (60,000) (70,000) Gross profit deferred $10,000 $30,000 EOY Receivable Payable $45,000 $36,000 Any amounts unsold at the end of the year are sold in the following year The following financial statements are reported at December 31, 2019 Income Statement Feustel Schmitt Sales $4,160,000 $401,600 Cost of goods sold (3,098,100) (232,700) Gross Profit 1,061,900 168,900 Income (loss) from subsidiary 30,400 Operating expenses (711,200) (89,900) Net income $ 381,100 $ 79,000 Statement of Retained Earnings Feustel Schmitt BOY Retained Earnings $3,010,720 $404,400 Net income 381,100 79,000 Dividends (74,500) (8,900) EOY Retained Earnings $3,317,320 $474,500 Statement of Retained Earnings Feustel Schmitt BOY Retained Earnings $3,010,720 $404,400 Net income 381,100 79,000 Dividends (74,500) (8,900) EOY Retained Earnings $3,317,320 $474,500 a How was the income from subsidiary calculated by Feustel Company $30400 What is the income attributable to NCI and how was it calculated b Do a proof of the investment account and NCI account at 12 31 18 and 12 31 19 I am looking for you to tell me what comprises the balance in these accounts (BV Sub Equity ) Note You have all the information you would need to calculate both beginning and ending investment balances Do not do a rollforward where you start with 12 31 18 and then put in current year activity to get the 12 31 19 balance That is not what I mean by proof c Prepare the entries required under the equity method on Feustel's pre consolidation books for 2019 d Prepare the consolidation entries for 2019 Every CEADI entry is required to do this consolidation e Prepare the consolidation spreadsheet What is provided in the Excel document is the same as the information provided above Add or delete rows if necessary to accommodate your solution consolidation entries

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Feustel Company acquired 80% of Schmitt Company on January 1, 2016 for $1,500,000. The FV of the non-controlling interests at the acquisition date was 260,000.

Feustel Company acquired 80% of Schmitt Company on January 1, 2016 for $1,500,000. The FV of the non-controlling interests at the acquisition date was 260,000. The book value of Schmitts equity was $1,000,000 at the time. Feustel uses the equity method to account for its investment in Star. The excess investment cost over book value was allocated as follows:

Building (10-year life) $150,000

Patent (7-year life) 112,000

Goodwill 498,000

Total $760,000

On December 31, 2017, Schmitt sold equipment to Feustel for $125,000. The equipment had a cost of 125,000 and accumulated depreciation of 75,000. The remaining life of the equipment was estimated at 5 years. [upstream]

Feustel regularly sells inventory to Schmitt. [downstream]Schmitt includes that inventory in the products that it ultimately sells to customers outside of the consolidated group. The following table shows the inventory sales information for the years ending 2018 and 2019:

	2018	2019
Transfer price for inventory sale	$70,000	$100,000
Cost of goods sold	(60,000)	(70,000)
Gross profit deferred	$10,000	$30,000

EOY Receivable/Payable	$45,000	$36,000

Any amounts unsold at the end of the year are sold in the following year.

The following financial statements are reported at December 31, 2019:

Income Statement
	Feustel	Schmitt
Sales	$4,160,000	$401,600
Cost of goods sold	(3,098,100)	(232,700)
Gross Profit	1,061,900	168,900
Income (loss) from subsidiary	30,400
Operating expenses	(711,200)	(89,900)
Net income	$ 381,100	$ 79,000

Statement of Retained Earnings
	Feustel	Schmitt
BOY Retained Earnings	$3,010,720	$404,400
Net income	381,100	79,000
Dividends	(74,500)	(8,900)
EOY Retained Earnings	$3,317,320	$474,500

Statement of Retained Earnings
	Feustel	Schmitt
BOY Retained Earnings	$3,010,720	$404,400
Net income	381,100	79,000
Dividends	(74,500)	(8,900)
EOY Retained Earnings	$3,317,320	$474,500

a. How was the income from subsidiary calculated by Feustel Company? $30400 What is the income attributable to NCI and how was it calculated?

b. Do a proof of the investment account and NCI account at 12/31/18 and 12/31/19. I am looking for you to tell me what comprises the balance in these accounts (BV Sub Equity + .). Note: You have all the information you would need to calculate both beginning and ending investment balances! Do not do a rollforward where you start with 12/31/18 and then put in current year activity to get the 12/31/19 balance. That is not what I mean by proof.

c. Prepare the entries required under the equity method on Feustel's pre-consolidation books for 2019.

d. Prepare the consolidation entries for 2019. Every CEADI entry is required to do this consolidation.

e. Prepare the consolidation spreadsheet. What is provided in the Excel document is the same as the information provided above. Add or delete rows if necessary to accommodate your solution/consolidation entries.