Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X8, included the following amounts:

	Mortar Corporation					Granite Company
Item	Debit		Credit			Debit		Credit
Cash	$	59,000				$	31,000
Accounts Receivable		83,000					71,000
Inventory		275,000					118,000
Land		80,000					30,000
Buildings & Equipment		500,000					150,000
Investment in Granite Company Stock		206,200
Cost of Goods Sold		490,000					310,000
Depreciation Expense		25,000					15,000
Other Expense		62,000					100,000
Dividends Declared		45,000					25,000
Accumulated Depreciation			$	180,000				$	90,000
Accounts Payable				86,000					30,000
Mortgages Payable				200,000					70,000
Common Stock				300,000					50,000
Retained Earnings				385,000					140,000
Sales				650,000					470,000
Income from Subsidiary				24,200
	$	1,825,200	$	1,825,200		$	850,000	$	850,000

Additional Information

1.	Accumulated depreciation on the buildings and equipment was $60,000 on the acquisition date. On January 1, 20X7, Granite reported net assets with a book value of $150,000 and a fair value of $191,250. The difference between fair value and book value of Granites net assets is related entirely to Buildings and Equipment. Granites depreciable assets had an estimated economic life of 11 years on the date of combination.
2.	At December 31, 20X8, Mortars management reviewed the amount attributed to goodwill and concluded goodwill was impaired and should be reduced to $14,000. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders.
3.	Mortar used the equity method in accounting for its investment in Granite.
4.	Detailed analysis of receivables and payables showed that Mortar owed Granite $9,000 on December 31, 20X8.
5.	Assume that the Investment in Granite Company Stock at 1/1/X8 is $202,000.

Required:

a.

Prepare all journal entries recorded by Mortar with regard to its investment in Granite during 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal Entry Worksheet

Record Mortar Corp.'s 80% share of Granite Co.'s 20X8 income.

Record Mortar Corp.'s 80% share of Granite Co.'s 20X8 dividend.

Record the amortization of the excess acquisition price.

Event

General Journal

Debit

Credit

1

*Enter debits before credits

b.

Prepare all consolidation entries needed to prepare a full set of consolidated financial statements for 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Consolidation Worksheet Entries

Record the basic consolidation entry.

Record the amortized excess value reclassification entry.

Record the excess value (differential) reclassification entry.

Record the entry to eliminate the intercompany accounts.

Record the optional accumulated depreciation consolidation entry.

Event

Accounts

Debit

Credit

1

*Enter debits before credits

c.

Prepare a three-part consolidation worksheet as of December 31, 20X8. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)