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 fair 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 falr value was attributed to goodwill. No goodwill Impalrments have occurred. Sander regularly sells Inventory to Plymouth. Below are details of the Intra-entity Inventory sales for the past three years: Year 2016 2017 2018 Intra-Entity Sales $ 125,000 220,000 300,000 Gross Profit Rate Intra-Entity on Intra-Entity Ending Inventory Inventory at Transfer Price Transfers $ 80,000 25% 125,000 160,000 28 25 Separate financial statements for these two companies as of December 31, 2018, follow: $ Sander (950,000) 500,000 85,000 120,000 15,000 $ 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 Common stock Additional paid-in capital Retained earnings 12/31/18 Total liabilities and stockholders' equity $ 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) (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. b. Prepare a worksheet to arrive at consolidated figures for external reporting purposes. At year end, there are no Intra-entity payables or receivables. 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 PLYMOUTH AND SANDER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Plymouth Sander Debit Credit Accounts NCI Consolidated Totals $ $ (1,740,000) 820,000 104,000 220,000 20,000 (124,000) (700,000) (950,000) 500,000 85,000 120,000 15,000 $ (230,000) $ $ $ $ $ Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in earnings of Sander Separate company net income Consolidated net income To noncontrolling interest to Plymouth Corp. Retained earnings, 1M Net income Dividends declared Retained earnings, 12/31 Cash Accounts receivable Inventory Investment in Sander Buildings and equipment Patents Goodwill Total assets Accounts payable Notes payable Noncontrolling interest 1M Noncontrolling interest 12/31 Common stock APIC Retained earnings, 12/31 Total liab. and SE (2,800,000) (700,000) 200,000 (3,300,000) 535,000 575,000 990,000 1,420,000 1,025,000 950,000 (345,000) (230,000) 25,000 (550,000) 115,000 215,000 800,000 863,000 107,000 $ $ 5,495,000 $ (450,000) $ (545,000) 2,100,000 (200,000) (450,000) (900,000) (300,000) (3,300,000) (5,495,000) (800,000) (100,000) (550,000) (2,100,000) $ $ PLYMOUTH AND SANDER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Plymouth Sander Debit Credit Accounts NCI Consolidated Totals $ $ (1,740,000) 820,000 104,000 220,000 20,000 (124,000) (700,000) (950,000) 500,000 85,000 120,000 15,000 $ (230,000) $ $ $ $ $ Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in earnings of Sander Separate company net income Consolidated net income To noncontrolling interest to Plymouth Corp. Retained earnings, 1M Net income Dividends declared Retained earnings, 12/31 Cash Accounts receivable Inventory Investment in Sander Buildings and equipment Patents Goodwill Total assets Accounts payable Notes payable Noncontrolling interest 1M Noncontrolling interest 12/31 Common stock APIC Retained earnings, 12/31 Total liab. and SE (2,800,000) (700,000) 200,000 (3,300,000) 535,000 575,000 990,000 1,420,000 1,025,000 950,000 (345,000) (230,000) 25,000 (550,000) 115,000 215,000 800,000 863,000 107,000 $ $ 5,495,000 $ (450,000) $ (545,000) 2,100,000 (200,000) (450,000) (900,000) (300,000) (3,300,000) (5,495,000) (800,000) (100,000) (550,000) (2,100,000) $ $