Flag quest Consolidation subsequent to date of acquisition - Equity method with noncontrolling interest and AAP Assume that, on January 1, 2009, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $500,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: [A] Asset Initial Fair Value Useful Life (years) [A] Asset Initial Useful Fair Value Life (years) 10 150,000 250,000 $500,000 10 Indefinite Property, plant and equipment (PPE), net $100,000 Customer list Goodwill 80% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following financial statements at December 31, 2013: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $7,330,000 $1,870,500 Assets Cost of goods sold (5,131,000) (1.122,300) Cash Gross profit 2,199,000 748,200 Accounts receivable $411,313 $131,511 938,240 433,956 Income (loss) from subsidiary 189,496 Operating expenses (1,392,700) Inventory (486,330) Equity investment 1,422,020 557,409 1,475,6+1 Net income $995,796 261,870 Property, plant and equipment (PPE), net 5,374,356 1,280,669 Statement of retained earnings: BOY retained earnings Net income Dividends EOY retained earnings $9,621,600 $2,403,545 $3,682,592 995,796 (199,159) $966,425 Liabilities and stockholders' equity 261,870 Current liabilities $1,053,321 $433,956 (39,281) Long-term liabilities 2,000,000 500,000 $4,479,229 $1,189,014 Common stock 1,198,455 124,700 APIC 890,595 155,875 Retained earnings 4,479,229 1,189,014 $9,621,600 $2,403,545