On January 1, 2017, Allan Company bought a 15 percent interest in Sysinger Company. The acquisition price of $221,500 reflected an assessment that all of Sysingers accounts were fairly valued within the companys accounting records. During 2017, Sysinger reported net income of $119,800 and declared cash dividends of $35,600. Allan possessed the ability to influence significantly Sysingers operations and, therefore, accounted for this investment using the equity method.

On January 1, 2018, Allan acquired an additional 80 percent interest in Sysinger and provided the following fair-value assessments of Sysingers ownership components:

Problem 4-43 (LO 4-9) On January 1, 2017, Allan Company bought a 15 percent interest in Sysinger Company. The acquisition price of $221,500 reflected an assessment that all of Sysinger's accounts were fairly valued within the company's accounting records. During 2017, Sysinger reported net income of $119,800 and declared cash dividends of $35,600. Allan possessed the ability to influence signitficantly Sysinger's operations and, therefore, accounted for this investment using the equity method. On January 1, 2018, Allan acquired an additional 80 percent interest in Sysinger and provided the following fair-value assessments of Sysinger's ownership components: Consideration transferred by Allan for 80% interest $1,448,000 271,500 90,500 Fair value of Allan's 15% previous ownership Noncontrol1ing interest's 5 fair value $1,810,000 Total acquisition-date fair value for Sysinger Company Also, as of January 1, 2018, Allan assessed a $432,000 value to an unrecorded customer contract recently negotiated by Sysinger. The customer contract is anticipated to have a remaining life of four years. Sysinger's other assets and liabilities were judged to have fair values equal to their book values. Allan elects to continue applying the equity method to this investment for internal reporting purposes At December 31, 2018, the following financial information is available for consolidation: Allan Sysinger Company (412,000) 249,200 Company $(1,005,600) 664,000 Revenues Operating expenses Equity earnings of Sysinger Gain on revaluation of Investment in (52,060) C (37,370) Sysinger to fair value S 431,030 162,800 Net income Retained earnings, January 1 (965,100) (431,030) 140,100 (651,200) (162,800) 43,200 Net income Dividends declared $(1,256,030) (770,800) Retained earnings, December 31 Current assets S 288,000 1,730,520 S 585,600 Investment in Sysinger (equity method) Property, plant, and equipment Patented technology 0 860,000 630,000 885,100 0 395,600 Customer contract 3,763,620 $1,611,200 Total assets Liabilities $(1,351,590) (936,000) (220,000) (1,256,030) S (128,400) (532,000) (180,000) (770,800) Common stock Additional paid-in capital Retained earnings, December 31 Total liabilities and equities $(3,763,620) $(1,611,200) a. How should Allan allocate Sysinger's total acquisition-date fair value (January 1, 2018) to the assets acquired and liabilities assumed for consolidation purposes? b. Calculate the following as they would appear in Allan's pre-consolidation 2018 statements. c. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2018. At year-end, there were no intra-entity receivables or payables. Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2018. At year-end, there were no intra-entity receivables or payables. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Show less ALLAN AND SYSINGER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Noncontrolling Sysinger Company Allan Consolidated Debit Accounts Credit Company Interest Totals $(412,000) $ (1,417,600) Revenues (1,005,600) Operating expenses Equity earnings of Sysinger Gain on revaluation Separate company net income 1,021,200 664,000 249,200 108,000 0 52,060 (52,060) 0 (37,370) $ 431,030 0 (37,370) $ (162,800) Consolidated net income S (433,770) NI attributable to noncontrolling interest (2,740) 2,740 (431,030) NI attributable to Allan Company Retained earnings, 1/1 Net income Dividends declared $(965,100) $ (651,200) 651,200 (965,100) (431,030) (162,800) (431,030) 140,100 43,200 41,040 2,160 $(770,800) $ (1,396,130) Retained earnings, 12/31 (1,256,030) Current assets $ 288,000 $ 585,600 873,600 Investment in Sysinger 1,730,520 0 Property, plant, and equipment Patented technology 860,000 630,000 1,490,000 885,100 395,600 1,280,700 Customer contract 0 0 432,000 108,000 324,000 Goodwill 0 14,800 14,800 $ 3,983,100 $ 3,763,620 $1,611,200 Total assets $ (128,400) $ (1,479,990) Liabilities (1,351,590) 532,000 Common stock (936,000) (532,000) (936,000) Additional paid in capital (220,000) (180,000) 180,000 (220,000) Retained earnings, 12/31 NCI in Sysinger, 1/1 NCI in Sysinger, 12/31 (1,256,030) (770,800) (1,256,030) C 0 (90,500) (91,080) 0 0 S S $ (3,892,020) Total liab. and stockholders' equity (3,763,620) 149,040 (1,611,200) 1,970,060