On 1/1/Y1, Grinder Co., under the equity method, paid $8/share cash for 60% of Noir Inc.s outstanding 100,000 shares of voting stock. The remaining 40% of Noirs outstanding voting stock had been traded at a fair market value of $6.50/share on the open market immediately before and after 1/1/Y1. Noirs available balance sheet accounts are as follows (credit balances are in brackets)

Current assets $14,000 Liabilities $(212,000)

Property and equipment, net $ 268,000 Common stock $(100,000)

Patents $ 190,000 Retained earnings $(160,000)

TOTAL; $472,000 (472,000)

Noirs books showed $260,000 for net stockholders equity on 1/1/Y1. The book value of all Noirs assets and liabilities on the acquisition date reflected their respective fair market value except for two assets: (1) an equipment that was understated on books when compared with its fair market value by $55,000 with a remaining life of 5 years and (2) possessed patents unrecorded on its books worth $285,000 with an estimated useful life of 10 years.

After owing Noir for two years, the respective companies financial statements for the year ended 12/31/Y2 are as follows.

Grinder Co. Noir, Inc.

Sales ..................................................................... $(640,500) $(428,500)

Cost of goods sold..................................................$ 325,000 $ 200,000

Depreciation expense .............................................$ 80,000 $ 34,000

Amortization expense ..............................................$14,000 $21,000

Other operating expenses .......................................$ 52,000 $ 63,500

Equity in Charless earnings...................................... $(42,300) $ 0

Separate company net income .........................$(211,800) $(110,000)

Retained earnings, 1/1/Y2 .........................................$(820,200) $(296,500)

Net income (above) ...................................................$(211,800) $(110,000)

Dividends declared ....................................................$50,000 $ 30,000

Retained earnings, 12/31/Y2 .......................................$(982,000) $(376,500)

Current assets.............................................................$125,000 $81,500

Investment in Noir, Inc. ................................................$ 562,500 $0

Property and equipment, net ......................................$ 837,000 $259,000

Patents .......................................................................$149,000 $147,500

Total Assets.................................................. $1,673,500 $488,000

Liabilities .......................................................................$(371,500) $(11,500)

Common stock-Grinder .....................................................$(320,000) $0

Common stock-Noir ........................................................$0 $(100,000)

Retained earnings, 12/31/Y2 (above) ..............................$(982,000) $ (376,500)

Total liabilities and equities ................$(1,673,500) $(488,000)

REQUIRED:

NB. There were no intra-entity receivables or payables. Grinder and Noir did not transfer any inventory between them for the whole Y2.

1.Calculate Grinder and the non-controlling interest (NCI)?

2 Calculate goodwill allocation between Grinder and NCI ?

. 3 Ending investment balances of Grinders investment in Noir and NCIs investment in Noir ?

4 The amount of annual excess amortization and the ending net amount for equipment?

5 The allocation of Noirs net income to Henry and NCI ?

6 The allocation of dividends declared by Noir to Grinder and NCI for the consolidation entries needed in preparing the consolidation worksheet