On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander's book value was $925,000, Plymouth assessed Sander's total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock. The book values of Sander's Individual assets and liabilities approximated their acquisition-date fall values except for the patent account, which was undervalued by $350,000. The undervalued patents had a five-year remaining life at the acquisition date. Any remaining excess fair value was attributed to goodwill. No goodwill impairments have occurred. Sander regularly sells Inventory to Plymouth. Below are details of the Intra-entity Inventory sales for the past three years: Intra-Entity Sales $ 125,000 220,000 300,000 Year 2016 2017 2018 Gross Profit Rate on Intra-Entity Inventory Transfers 25% Intra-Entity Ending Inventory at Transfer Price $ 80,000 125,000 160,000 Separate financial statements for these two companies as of December 31, 2018, follow: Separate financial statements for these two companies as of December 31, 2018, follow: $ Sander (950,000) 500,000 85,000 120,000 15,000 $ $ Plymouth $(1,740,000) 820,000 104,000 220,000 20,000 (124,000) $ (700,000) $(2,800,000) (700,000) 200,000 $(3,300,000) $ 535,000 575,000 990,000 1,420,000 1,025,000 950,000 $ 5,495,000 $ (450,000) (545,000) (900,000) (300,000) (3,300,000) $(5,495,000) Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in earnings of Sander Net income Retained earnings 1/1/18 Net income Dividends declared Retained earnings 12/31/18 Cash Accounts receivable Inventory Investment in Sander Buildings and equipment Patents Total assets Accounts payable Notes payable Corrmon stock Additional paid-in capital Retained earnings 12/31/18 Total liabilities and stockholders' equity (230,000) (345,000) (230,000) 25,000 (550,000) 115,000 215,000 800,000 $ $ 863,000 107,000 $ 2,100,000 $ 200,000) (450,000) (800,000) (100,000) (550,000) $(2,100,000) a. Prepare a schedule that calculates the Equity in Earnings of Sander account balance. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule that calculates the Equity in Earnings of Sander account balance. 2018 income reported by Sander Excess patent fair value amortization Deferred gross profit for 12/31/18 intra-entity inventory Recognized gross profit for 1/1/18 intra-entity inventory Sander's net income adjusted To controlling interest To noncontrolling interest On January 1, 2016, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander's book value was $925,000, Plymouth assessed Sander's total business fair value at $1,500,000. Since that time, Sander has neither issued nor reacquired any shares of its own stock. The book values of Sander's Individual assets and liabilities approximated their acquisition-date fall values except for the patent account, which was undervalued by $350,000. The undervalued patents had a five-year remaining life at the acquisition date. Any remaining excess fair value was attributed to goodwill. No goodwill impairments have occurred. Sander regularly sells Inventory to Plymouth. Below are details of the Intra-entity Inventory sales for the past three years: Intra-Entity Sales $ 125,000 220,000 300,000 Year 2016 2017 2018 Gross Profit Rate on Intra-Entity Inventory Transfers 25% Intra-Entity Ending Inventory at Transfer Price $ 80,000 125,000 160,000 Separate financial statements for these two companies as of December 31, 2018, follow: Separate financial statements for these two companies as of December 31, 2018, follow: $ Sander (950,000) 500,000 85,000 120,000 15,000 $ $ Plymouth $(1,740,000) 820,000 104,000 220,000 20,000 (124,000) $ (700,000) $(2,800,000) (700,000) 200,000 $(3,300,000) $ 535,000 575,000 990,000 1,420,000 1,025,000 950,000 $ 5,495,000 $ (450,000) (545,000) (900,000) (300,000) (3,300,000) $(5,495,000) Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in earnings of Sander Net income Retained earnings 1/1/18 Net income Dividends declared Retained earnings 12/31/18 Cash Accounts receivable Inventory Investment in Sander Buildings and equipment Patents Total assets Accounts payable Notes payable Corrmon stock Additional paid-in capital Retained earnings 12/31/18 Total liabilities and stockholders' equity (230,000) (345,000) (230,000) 25,000 (550,000) 115,000 215,000 800,000 $ $ 863,000 107,000 $ 2,100,000 $ 200,000) (450,000) (800,000) (100,000) (550,000) $(2,100,000) a. Prepare a schedule that calculates the Equity in Earnings of Sander account balance. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule that calculates the Equity in Earnings of Sander account balance. 2018 income reported by Sander Excess patent fair value amortization Deferred gross profit for 12/31/18 intra-entity inventory Recognized gross profit for 1/1/18 intra-entity inventory Sander's net income adjusted To controlling interest To noncontrolling interest