Mortar Corporation acquired 80% ownership of Granite Company on January 1, 2007, for $173,000. At that date, the fair value of the non-controlling interest was $43, 250. On January 1, 2007, Granite's book value for Common Stock was $50,000 & Retained Earnings was $100,000. Additional info: On January 1, 2007, Granite reported Buildings & Equipment with a book value of $150,000 and a fair value of $191,250. Granite's depreciable assets had an estimated economic life of 11 years on the date of the combination. Assume that any goodwill impairment should be recorded as an adjustment in Mortar's equity method accounts along with the differential components. Mortar uses the equity method in accounting for its investment in Granite. 1. Give all journal entries recorded by Mortar with regard to its investment in Granite on the date of the combination, January 1, 2007. Investment in Granite 173,000 cash 173000 Cat in Granite 48000 Inc. from subsider 45,000 cash 16,000 Invest.in Granite 16,000 Income from soie. 3,000 Invest. in Granite 3,000 2. Give all eliminating entries needed to prepare a full set of consolidated financial statements immediately following the combination. Show Book value calculations & excess value (differential) calculations (see last page): Part 2: The trial balances for the two companies on December 31, 2007, included the following amounts: Trial Balance December 31, 2007 Mortar Corporation Granite Company Debit Credit Debit Credit Cashi 38,000 25,000 Accounts Receivable: 50,000 55,000 Inventory 240,000 100,000 Land 80,000 20,000 Buildings & Equipment 500,000 150,000 Investment in Granite Company Stock - X 202,000 Cost of Goods Sold 500,000 250,000 Depreciation Expense 25,000 15,000 Other Expense 75,000 75,000 Dividends Declared 50,000 20,000 Accumulated Depreciation 155,000 75,000 Accounts payable 70,000 35,000 Mortgage payable 200,000 50,000 Common Stock 300,000 50,000 Retained Earnings 290,000 100,000 Sales 700,000 400,000 Income from Subsidiary X 45,000 1,760,000 1,760,000 710,000 710,000 Additional information for 2007: Granite reported $60,000 of income and $20,000 of dividends in 2007. Also, detailed analysis of receivables and payables showed that Granite owed Mortar S16,000 on December 31, 2007. 3. Give all journal entries recorded by Mortar with regard to its investment in Granite during 2007 Income from subsidary Investment in Granite Cash Investment in Granite Income from Subsickity Investment in Granitt 48,000 48,000 16,000 16,000 3000 3.000 4. Give all eliminating entries needed to prepare a full set of consolidated financial statements for 2007. Show Book value calculations & excess value (differential) calculations (see last page)