LO2 50. Consolidation several years subsequent to date of acquisitionEquity method Assume a parent company acquired a subsidiary on January 1, 2017. The purchase price was $820,000 in excess of the subsidiarys book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following [A] assets: X [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net Patent License Goodwill $240,000 240,000 160,000 180,000 $820,000 12 years 8 years 10 years Indefinite The [A] assets with definite useful lives have been depreciated or amortized as part of the parent's pre- consolidation equity method accounting. The Goodwill asset has been tested annually for impairment, and has not been found to be impaired. The financial statements of the parent and its subsidiary for the year ended December 31, 2019, are as follows: Parent Subsidiary Parent Subsidiary Balance sheet: Assets $4,800,000 (3,500,000) $1,300,000 (774,000) 526,000 Cash.. $ 720,000 Income statement: Sales... Cost of goods sold Gross profit. Equity income. Operating expenses. $ 330,000 1,300,000 Accounts receivable 280,000 500,000 120,000 (720,000) (340,000) $ 186,000 Inventory Equity investment. Property, plant and equipment (PPE), net 1,130,000 1,450,000 1,800,000 2,900,000 Net income $ 700,000 780,000 $8,000,000 $1,890,000 Statement of retained earnings: Beginning retained earnings... $1,600,000 Net income 700,000 Dividends (360,000) Ending retained earnings ... $1,940,000 $ 680,000 186,000 (36,000) $ 830,000 Liabilities and stockholders' equity Accounts payable. Accrued liabilities Long-term liabilities. Common stock APIC Retained earnings $ 760,000 840,000 2,150,000 610,000 1,700,000 1,940,000 $8,000,000 $ 122,000 160,000 430,000 190,000 158,000 830,000 $1,890,000 a. b. c. Compute the Equity Investment balance as of January 1, 2019. Show the computation to yield the $120,000 equity income reported by the parent for the year ended December 31, 2019. Show the computation to yield the $1,800,000 Equity Investment account balance reported by the parent at December 31, 2019. Prepare the consolidation entries for the year ended December 31, 2019. Prepare the consolidation spreadsheet for the year ended December 31, 2019. d. e