On January $1,2020,$ Mcllroy, Inc., acquired a $60$ percent interest in the common stock of Stinson, Inc., for

$$384,600.$ Stinson's book value on that date consisted of common stock of $$100,000$ and retained earnings

of $$227,300.$ Also, the acquisition$-$date fair value of the $40$ percent noncontrolling interest was $$256,400.$ The

subsidiary held patents $($with a $10-$year remaining life$)$ that were undervalued within the company's

accounting records by $$78,400$ and an unrecorded customer list $(15-$year remaining life$)$ assessed at a

$$54,300$ fair value. Any remaining excess acquisition$-$date fair value was assigned to goodwill. Since

acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill

impairment has occurred. At year$-$end, there are no intra$-$entity payables or receivables.

Intra$-$entity inventory sales between the two companies have been made as follows:

The individual financial statements for these two companies as of December $31,2021,$ and the year then

ended follow:

$($Note: Parentheses indicate a credit balance.$)$

a$.$ Show how Mcllroy determined the $$423,453$ Investment in Stinson account balance. Assume that Mcllroy

defers $100$ percent of downstream intra$-$entity profits against its share of Stinson's income.

b$.$ Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of

December $31,2021.$