Major Corporation acquired 90 percent of Lancaster Companys voting common stock on January 1, 20X1, for $503,100. At the time of the combination, Lancaster reported common stock outstanding of $129,000 and retained earnings of $390,000, and the fair value of the noncontrolling interest was $55,900. The book value of Lancasters net assets approximated market value except for patents that had a market value of $40,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Lancaster reported net income of $60,000 and paid dividends of $21,000 during 20X1.

A. What balance did Major report as its investment in Lancaster at December 31, 20X1, assuming Major uses the equity method in accounting for its investment?

B. Record the basic consolidation entry.

Common stock:

Retained Earnings:

Income from Lancaster comp:

NCI in NI of Lancaster Company

Dividends declared

Investment in Lancaster Company

NCI in NA of Lancaster Company

C. Record the amortized excess value reclassification entry.

D. Record the excess value (differential) reclassification entry.

Patents:

Investment in Lancaster Company:

NCI in NA of Lancaster Company:

Required a. What balance did Major report as its investment in Lancaster at December 31, 20X1, assuming Major uses the equity method in accounting for its investment? Answer is complete but not entirely correct Balance in investment account $535,000X b. Prepare the consolidation entry or entries needed to prepare consolidated financial statements at December 31, 20X1. (lf no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete Event Accounts Debit Credit Common stock Retained earnings Income from Lancaster Company NCI in NI of Lancaster Company Dividends declared 129,000 390,000 503,100X Investment in Lancaster Company NCI in NA of Lancaster Company Investment in Lancaster Company X 54,000X 54,000X Income from Lancaster Company NCI in NA of Lancaster Company Patents Investment in Lancaster Company NCI in NA of Lancaster Company