On January 1, 2013, Irmgard Company acquired Louise Co. by issuing 55,000 shares of its common Stock with a market value of $40 per share ($1 par value). A building on Louise's books was undervalued by $200,000, which has a remaining useful life of 10 years. Also, there was an unrecorded customer list valued at $300,000, which has a remaining useful life of 10 years; as well as a 10-year franchise agreement valued at $250,000. The separate 2013 financial statements for Irmgard and Louise are show as follow.

	Irmgard	Louise
Sales revenue	$3,600,000	$1,950,000
Cost of goods sold	(2,520,000)	(1,170,000)
Gross profit	1,080,000	780,000
Operating expenses	(684,000)	(507,000)
Equity income	198,000	_
Net Income	$ 594,000	$ 273,000
Retained Earnings, 1/1/13	$1,830,500	$1,007,500
Net income	594,000	273,000
Dividends	(32,040)	(40,950)
Retained Earnings, 12/31/13	$2,392,460	$1,239,550
Cash and receivables	$ 772,275	$ 954,850
Inventory	698,400	581,100
Equity investment	2,357,050
Property, plant & equipment (Net)	3,719,520	1,075,100
Total Assets	$7,547,245	$2,611,050
Accounts payable	$ 281,020	$ 185,900
Accrued liabilities	313,200	243,100
Notes payable	1,250,000	650,000
Common stock	407,000	130,000
Additional paid-in capital	2,903,565	162,500
Retained Earnings, 12/31/13	2,392,460	1,239,550
Total Liabilities and Equities	$7,547,245	$2,611,050

Requirements:

1. Show the analysis of acquisition cost and AAP, including the total AAP, its allocation at the time of the allocation, and how it is amortized in 2013. (10pts).

2. For Irmgard, prepare all journal entries to record its investment in the subsidiary under the fully adjusted equity method in 2013. (9pts)

3. For the consolidated entity, prepare all necessary consolidation entries for 2013. (16pts)

4. Finish the income statement section of the consolidation worksheet. (6pts)

	Irmgard	Louise	Dr.	Cr.	Consolidated
Sales revenue	$3,600,000	$1,950,000
Cost of goods sold	(2,520,000)	(1,170,000)
Gross profit	1,080,000	780,000
Operating expenses	(684,000)	(507,000)
Equity income	198,000
Net Income	$ 594,000	$ 273,000