On January 1, 2017, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $340,200. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $201.100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $226,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $76.900 and an unrecorded customer list (15-year remaining life) assessed at a $52,800 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: Year 2017 2018 Cost to Mcllroy $126,300 112.500 Transfer Price to Stinson $157,875 150.000 Ending Balance (at transfer price) $52.625 37.500 The individual financial statements for these two companies as of December 31, 2018, and the year then ended follow: Sinson, Inc $ (362,000) 221.200 75,400 $ S Mcllroy, Inc. $ (726,000) 477 200 195.760 (33 664) $ (86.704) $ (770,600) (85704) 47 500 (809.804) 278.000 259,200 394 533 334,000 23.8.500 Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities 165,400) 2H2 200) (65,400) 17.900 (329,700) 150.100 130,900 $ $ $ 1,502,233 (392,429) (300.000) (809,804) $ (1,502,233) 204,800 88.400 22.800 596,800 (167,100) (100.000) (329,700) (596,800) $ a. Show how Mcllroy determined the $394,533 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, 2018 Complete this question by entering your answers in the tabs below. Required A Required B Show how McIlroy determined the $394,533 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. $ 340,200 Consideration transferred Increase in Stinson's retained earnings 1/1/17 to 1/1/18 Excess fair value amortization 2017 ending inventory profit deferral Mcllroy's equity in earnings of Stinson for 2018 Stinson 2018 dividends declared to Mcllroy Investment account balance 12/31/18 $ 48,660 (6,726) (10,525) 31,409 33,664 (10.740) $ 394,533 Required A Required B > On January 1, 2017, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $340,200. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $201.100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $226,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $76.900 and an unrecorded customer list (15-year remaining life) assessed at a $52,800 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: Year 2017 2018 Cost to Mcllroy $126,300 112.500 Transfer Price to Stinson $157,875 150.000 Ending Balance (at transfer price) $52.625 37.500 The individual financial statements for these two companies as of December 31, 2018, and the year then ended follow: Sinson, Inc $ (362,000) 221.200 75,400 $ S Mcllroy, Inc. $ (726,000) 477 200 195.760 (33 664) $ (86.704) $ (770,600) (85704) 47 500 (809.804) 278.000 259,200 394 533 334,000 23.8.500 Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities 165,400) 2H2 200) (65,400) 17.900 (329,700) 150.100 130,900 $ $ $ 1,502,233 (392,429) (300.000) (809,804) $ (1,502,233) 204,800 88.400 22.800 596,800 (167,100) (100.000) (329,700) (596,800) $ a. Show how Mcllroy determined the $394,533 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, 2018 Complete this question by entering your answers in the tabs below. Required A Required B Show how McIlroy determined the $394,533 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. $ 340,200 Consideration transferred Increase in Stinson's retained earnings 1/1/17 to 1/1/18 Excess fair value amortization 2017 ending inventory profit deferral Mcllroy's equity in earnings of Stinson for 2018 Stinson 2018 dividends declared to Mcllroy Investment account balance 12/31/18 $ 48,660 (6,726) (10,525) 31,409 33,664 (10.740) $ 394,533 Required A Required B >