On January 1, 2019 Pender Corp. acquired 80% of Swain Companys 100,000 outstanding common voting shares. To gain control of Swain, Pender paid $11 per share for its 80% interest. Post-acquisition the remaining 20% of Swains shares have a fair value of $9.75 per share. On Jan. 1, 2019 Swains retained earnings totaled $510,000.

At the date of acquisition a valuation consultant determines that the following of Swains asset and liabilities have fair value differences:

Carrying value Fair Value

Trademarks $260,000 $320,000

Patented Technology (20-yr rem. Life) 480,000 600,000

Equipment (10-yr rem. Life) 160,000 150,000

Long-Term Bonds (8 yrs to maturity) 590,000 500,000

Required: a. Determine the total fair value of Swain that should be used at January 1, 2019 to determine the excess of fair value over book value.

b. Prepare the AAP schedule for the acquisition, along with an amortization schedule for 2019 and 2020.

c. Prepare the 2020 consolidated worksheet (the 2019 consolidated worksheet was prepared correctly).

d. Prepare the 2020 consolidated income statement and 2020 consolidated balance sheet, in good form.

e. In a separate analysis, assume that at the end of 2020 that Pender determines that the goodwill associated with the Swain reporting unit is impaired. The amount of impairment is $80,000. If this were the case, what amount of Equity income in Swain would Pender have reported for 2020? What would NCI income have been for 2020? In addition, what would the ending Investment in Swain balance be on Penders balance sheet?