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Problem 4-37 (LO 41, 4-5, 4-6) Padre. |nc.. buys 80 percent ofthe outstanding common stock of Sierra Corporation on January 1. 2015. for $36,480 cash. At the acquisition date. Sierra's total fair value. including the noncontroiling interest. was assessed at $920,600 although Sierra's book value was only 5606.000. Also, several individual items on Sierra's nancial records had fair values that differed from their book values as follows: Book Value Fair value Land 3 6?.000 $ 294,000 Buildings and equipment [10-year remaining life) 366.000 324.000 Copyright (20-year life} 'i 90.000 310,000 Notes payable (due in 8 years} (161.000) (1?1.400) For internal reporting purposes. Padre. Inc.. employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2015. for both companies. Padre Sierra Revenues $11,544,300) $ {620.500} Cost of goods sold 706.000 449.000 Depreciation expense 2?6.000 1?.500 Amortization expense 0 9.500 Interest expense 47.500 1500 Equity in income of Sierra (10?.200) 0 Net income 6 (532.000) $ {131000} Retained earnings. 1f1f15 $(1.462.500) $ {446.000} Net income (above) (532.000) [131000] Dividends declared 260.000 65.000 Retained earnings. 12i$1f15 $(1,?54.500) $ {518.000} Current assets $ 1,137,620 $ 493.000 Investment in Sierra r91 .660 0 Current assets $ 1.137.820 $ 493,000 Investment in Siene 791.680 0 Land 361.000 67.000 Buildings and equiment (nIt) 941.000 348.500 Copyright 0 180,500 Total assets $ 3.231.500 $ 1.089.000 Accounts payable $ (232.000) $ (230,000) Notes payable (495.000) (181.000) Common stock (300.000) (100.000) Additional pald-in capital (450.000) (60.000) RetainId Iamlngs (abovI) (1.754.500) (518,000) Total liabilities and equities $(3,231.5om $(1 .osspoo) At year-end. there were no lntra-entity receivables or payables. Using the acquisition method. prepare the worksheet to consolidate these two companies. Revenues (1.544.300) (320,500) Cost of goods sold 796.000 449.000 Depreciation expense 273.000 17.500 276.000 1?.500 Depreciation expense Amortization expense 0 9.500 Interest expense 47.500 7.500 Equity in income ofSierra (107.200) 0 Separate oompany net income (532.000) (137.000) Consolidated net inoome NCI in consolidated net income Controlling interest in CNI Retainod eamings 111 (1.482.500) (446.000) Net income (above) (532.000) (137.000) Dividends declared 260.000 85.000 Retainod eamings 12.31 (1.754.500) (518.000) Current assets 1.137.820 493.000 Investment in Sierra 791.680 Land 361.000 37.000 Buildings and equipment (net) 941.000 348.500 Copyright 0 180.500 Total assets 3,231,500 1.089.000 Accounts payable (232.000) (230.000) Notes payable (495.000) (181.000) NCI in Sierra 1I1 NCI in Sierra 1231 Common stock (300.000) (100.000) Additional paid-in capital (450.000) (60.000) Retainod earnings 1 21'31 (abovo) (1 .754.500) (518.000) Total liabilities and stockholders' equity 3.231.500 1.089.000 answer IE not WI'I'IPIBW Revenues (1,544,300) (320,500) (020.500)3 (124.100)3 (2,134,300\" Cost of goods sold 793,000 449,000 440.0003 89,8003 1,245,000J Depreciation expense 273,000 17,500 17.5003 3.5003 293.5003 Amortization expense 0 9,500 9.5003 1.900X 9.500X Interest expense 47,500 7,500 7.5003 1.5003 55.0003 Equity in income of Sierra (107,200) 0 107.200J Separate company net income (532,000) (137,000) Consolidated net income (501,300) NCI in consolidated net income (27.400)! (27,400)\" Controlling interest in CNI (589.200) Retained eemings 1:1 (1 ,402,500) (446,000) (445,000)3 13,0003 0,432,500\"! Net income (above) (532,000) (137,000) 107.2003 (561.800)3 Dividends deoiared 250,000 65.000 65.0003 13,000.} 325.0003 Retained earnings 12:31 (1,754,500) (510,000) (1,719,300) Current assets 1,137,020 493,000 403.0003 1,630.820J Investment in Sierra 791.680 791.680\" Land 361,000 67,000 67.0003 425.0003 Buildings and equipment (net) 941,000 348,500 348.5003 1.289.500X Copyright 0 150,500 150.5003 180.5003 Total assets 3,231,500 1,009,000 3,523,020 Current assets 1,137,020 493,000 493qu 1,630,820J Investment in Sierra 791,680 791 .680K Land 301,000 07,000 67.000x 420,000X Buildings and equipment (net) 941,000 348,500 348,500X 1,289.500x Copyright 0 100,500 100.5003 100,500! Total assets 3,231,500 1,089,000 3, 528,320 Accounts payable (232,000) (230,000) (230.000)! (402000\"! Notes payable (495,000) (101,000) (181,000)' (121,200)x (676.000)! NCI in Sierra 111 (151.000)! NCI in Sierra 12.131 (150,000) Common slack (300,000) (100,000) (20.000): (300.000W Additional paid-in capital (450,000) (60,000) (12.000): (450,000\" Retained earnings 12131 (above) (1,754,500) (518,000) 13.000X (1.741.500)X Total liabilities and stockholders' equity 3,231,500 1,089,000 1,864,900 (717,820) (3,700,500)