grepare consolidation spreadsheet for intercompany sale of equipment-Cost method Assume that a parent company acquired a subsidiary on January 1, 2012 for S832000 The purchase was $299,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acq tjon date. On the acquisition date, the subsidiary's stockholders equity was comprised of $390 -ar common stock and $143,000 of retained earnings. The Acquisition Accounting Premium C as assigned as follows: an increase of $13,000 in accounts receivable that were entirely coll 06 the year after acquisition, an increase of $65,000 for property, plant and equipment that of remaining useful life, $104,000 for an unrecorded patent with an & ycar remaining life for goodwill All amortizable components of the AAP are amortized using the straight-line me s 10 years On January 1, 2014, the parent sold Equipment to the subsidiary for a cash prico nt had acquired the equipment at a cost of $124,800 and depreciated the equipment over i ul life using the straight-line method (no salvage value). The parent had depreciated the equipmen of $128,700. The or 2 years at the time of sale. The subsidiary retained the depreciation policy of the parent ates the equipment over its remaining 10-year useful life. Following are financial statements of the parent and its subsidiary as of December 31, 2016. The parent uses the cost method of pre-consolidation investment bookkeeping. Parent Parent Subsidiary Income statement Balance sheet: $1,300,000 $598,000 Assets Cost of goods sold Gross profie Doprec & amortexpense Operating expenses Interest expense. Total expenses (715,000) (384,000) Cash 234,000 Accounts receivable 26,000 Inventory. s 117,000 78,000 117,000 585,000 (390,000) (104,000 Equity investment 448,500(136,500) Other assets 156,000 832,000 442,000 182,000 312,000 6,500) PPE, net 169,000 286,000 ncome (oss) from subsidiary Total assets. 090000 $975,000 s 182,000 $97,500 Liabilities and stockholders' equity s 325,000 $70,200 59,800 78,000 390,000 377,000 Accounts payable. Accrued liabilities Statement of retained earnings BOY retained earnings Net income 715,000 $325,000 Notes payable 182,000 (149,500) (45,500) Retained earnings 195,000 780,000 747,500 97,500 Common stock. Ending retained earnings $ 747,500 $377,000 Total liabilities and equity....$2,080,000 $975,000 Prepare the journal entry that the parent made to record the sale of the equipment to the ubsidiary, the journal entry that the subsidiary made to record the purchase, and the (1] entries for the year of sale a. b. Compute the remaining portion of the deferred gain at January 1, 2016 c. Prior to preparing consolidated financial statements, compute the amount of net income the parent would have reported for the year ended December 31, 2016 assuming the parent applied the equity method instead of the cost method of pre-consolidation bookkeepin ior to preparing consolidated financial statements, compute the amount of Equity investment method instead of the cost method of pre-consolidation bookkeeping Prepare the consolidation entries for the year ended December 31, 2016 Prepare the consolidation spreadsheet for the year ended December 31, 2016. d. Pr 16 assuming the parent applied the equity e. grepare consolidation spreadsheet for intercompany sale of equipment-Cost method Assume that a parent company acquired a subsidiary on January 1, 2012 for S832000 The purchase was $299,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acq tjon date. On the acquisition date, the subsidiary's stockholders equity was comprised of $390 -ar common stock and $143,000 of retained earnings. The Acquisition Accounting Premium C as assigned as follows: an increase of $13,000 in accounts receivable that were entirely coll 06 the year after acquisition, an increase of $65,000 for property, plant and equipment that of remaining useful life, $104,000 for an unrecorded patent with an & ycar remaining life for goodwill All amortizable components of the AAP are amortized using the straight-line me s 10 years On January 1, 2014, the parent sold Equipment to the subsidiary for a cash prico nt had acquired the equipment at a cost of $124,800 and depreciated the equipment over i ul life using the straight-line method (no salvage value). The parent had depreciated the equipmen of $128,700. The or 2 years at the time of sale. The subsidiary retained the depreciation policy of the parent ates the equipment over its remaining 10-year useful life. Following are financial statements of the parent and its subsidiary as of December 31, 2016. The parent uses the cost method of pre-consolidation investment bookkeeping. Parent Parent Subsidiary Income statement Balance sheet: $1,300,000 $598,000 Assets Cost of goods sold Gross profie Doprec & amortexpense Operating expenses Interest expense. Total expenses (715,000) (384,000) Cash 234,000 Accounts receivable 26,000 Inventory. s 117,000 78,000 117,000 585,000 (390,000) (104,000 Equity investment 448,500(136,500) Other assets 156,000 832,000 442,000 182,000 312,000 6,500) PPE, net 169,000 286,000 ncome (oss) from subsidiary Total assets. 090000 $975,000 s 182,000 $97,500 Liabilities and stockholders' equity s 325,000 $70,200 59,800 78,000 390,000 377,000 Accounts payable. Accrued liabilities Statement of retained earnings BOY retained earnings Net income 715,000 $325,000 Notes payable 182,000 (149,500) (45,500) Retained earnings 195,000 780,000 747,500 97,500 Common stock. Ending retained earnings $ 747,500 $377,000 Total liabilities and equity....$2,080,000 $975,000 Prepare the journal entry that the parent made to record the sale of the equipment to the ubsidiary, the journal entry that the subsidiary made to record the purchase, and the (1] entries for the year of sale a. b. Compute the remaining portion of the deferred gain at January 1, 2016 c. Prior to preparing consolidated financial statements, compute the amount of net income the parent would have reported for the year ended December 31, 2016 assuming the parent applied the equity method instead of the cost method of pre-consolidation bookkeepin ior to preparing consolidated financial statements, compute the amount of Equity investment method instead of the cost method of pre-consolidation bookkeeping Prepare the consolidation entries for the year ended December 31, 2016 Prepare the consolidation spreadsheet for the year ended December 31, 2016. d. Pr 16 assuming the parent applied the equity e