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Through the payment of $15,216,500 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60 percent of the subsidiary's 110,000 outstanding common shares ($50 par value) as well as all 36,000 shares of 6 percent, cumulative, $100 par value preferred stock. Of the total payment, $5.0 million is attributed to the fully participating preferred stock with the remainder paid for the common. This acquisition is carried out on January 1, 2021, when Young reports retained earnings of $11.9 million and a total book value of $21.0 million. The acquisition-date fair value of the noncontrolling interest in Young's common stock was $6,811,000. On this same date, a building owned by Young (with a 6-year remaining life) is undervalued in the financial records by $570,000, while equipment with a 10-year remaining life is overvalued by $300,000. Any further excess acquisition date fair value is assigned to a brand name with a 20-year remaining life. During 2021. Young reports net income of $1,090,000 while declaring $590,000 in cash dividends. Drexel uses the initial value method to account for both of these investments. Prepare appropriate consolidation entries for 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in millions.) Answer is not complete. No Transaction Debit Credit 1 1 solo Accounts Preferred stock (Young) Common stock (Young) Retained earnings (Young) Building Brand name Equipment Investment in Young's preferred stock Investment in Young's common stock Noncontrolling interest 3,600,000 5,500,000 11,900,000 570,000 757,500 300,000 5,000,000 10,216,500 6,811,000 2 2 216,000 Dividend income Dividends declared lo 216,000 3 3 Dividend income Dividends declared 590,000 4 102,875 30,000 Amortization expense Equipment Building Brand name OO 95,000 37.875 Following are separate income statements for Austin, Inc., and its 80 percent-owned subsidiary, Rio Grande Corporation as well as a consolidated statement for the business combination as a whole (credit balances indicated by parentheses). Austin $ (702,000) 402,000 102,000 (85,600) $ (283, 600) Rio Grande $ (502,000) 298,000 72,000 Consolidated $ (1,204,000) 700,000 199,000 Revenues Cost of goods sold Operating expenses Equity in earnings of Rio Grande Individual company net income Consolidated net income Noncontrolling interest in consolidated net income Consolidated net income attributable to Austin $(132,000) $ (305,000) (21,400) (283,600) $ Additional Information Annual excess fair over book value amortization of $25,000 resulted from the acquisition. The parent applies the equity method to this investment. Austin has 50,000 shares of common stock and 6,000 shares of preferred stock outstanding. Owners of the preferred stock are paid an annual dividend of $50,000, and each share can be exchanged for five shares of common stock. Rio Grande has 28,000 shares of common stock outstanding. The company also has 6,000 stock warrants outstanding. For $15, each warrant can be converted into a share of Rio Grande's common stock. Austin holds half of these warrants. The price of Rio Grande's common stock was $20 per share throughout the year. Rio Grande also has convertible bonds, none of which Austin owned. During the current year, total interest expense (net of taxes) was $23,000. These bonds can be exchanged for 13,000 shares of the subsidiary's common stock. . Determine Austin's basic and diluted EPS. (Round your intermediate percentage value to 1 decimal place. Round your final answers to 2 decimal places.) Answer is not complete. Earnings Per Share 5 4.67 Basic Diluted
