North Company paid $10,000,000 for 80% of the voting stock of South Company on January 1, 2007. It is now December 31, 2014 (eight years after the acquisition). North accounts for its investment using the equity method. Souths stockholders equity at the date of acquisition was $6,000,000 ($2,000,000 capital stock, $4,000,000 retained earnings). The estimated fair value of the non-controlling interest in South Company at the date of acquisition is $2,400,000. As of the date of acquisition:

Plant & equipment Overvalued by $3,000,000 20-year life, straight-line

Identifiable intangibles Undervalued by $5,500,000 10-year life, straight-line

Long-term debt Undervalued by $100,000 5-year life, straight-line

Goodwill Impairment: $625,000 for 2007-2013, $50,000 for 2014

Note: The impairment in goodwill is distributed between controlling and non-controlling interest based on the percentage of goodwill each of them gets (for example, if the non-controlling interest gets 5% of the entire goodwill, they also get 5% of the impairment).

Required: 1. Determine the Goodwill assigned to Non-controlling interest at the acquisition date. (2 points)

2. Prepare supporting amortization of ECOBV schedule for 2014 and verify the equity in income balance for 2014, as reported on Norths separate income statement. (3 points)

3. Calculate the balance of NCI at December 31, 2014. Provide detail calculations. (5 points)

4. Complete a consolidated worksheet as of December 31, 2014. (15 points).

The 2014 pre-closing trial balances for North and South are: North Co. South Co. in thousands) Dr (Cr) Dr (Cr) Sales revenue Equity in net income of South Cost of goods sold Other operating expenses (35,000)(20,000) (359) 29,000 5,700 (659) 14,000 5,100 (900) Net Income Current assets Plant & equipment, net Investment in South 20,000 55,000 12,327 Total Assets87,327 6,000 29,700 35,700 Current liabilities Long-term debt Capital stock Retained earnings, Jan. 1 Net Income Dividends (15,000)(6,000) (20,000)(17,000) (30,000) (2,000) (21,768)(10,000) (900) 200 Total Liabilities and Equity (87,327) (35,700) (659) 100