On January 1, 2020, Allan Company bought a 15 percent interest in Sysinger Company. The acquisition price of $204,500 reflected an assessment that all of Sysinger's accounts were fairly valued within the company's accounting records. During 2020, Sysinger reported net income of $110,700 and declared cash dividends of $33,100. Allan possessed the ability to significantly influence Sysinger's operations and therefore, accounted for this investment using the equity method. On January 1, 2021, 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 900 interest Fair value of Allan's 155 previous ownership Noncontrolling interest's 58 fair value Total acquisition date fair value for Sysinger Company $ 2,422,400 266,700 98,900 $ 1,778,000 Also, as of January 1, 2021, Allan assessed a $415,000 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, 2021, the following financial information is available for consolidation: Sysinger Company $ (400,000) 242,000 0 0 Revenues Operating expenses Equity earnings of Sysinger Gain on revaluation of Investment in Sysinger to fair value Net income Retained earnings, January 1 Net income Dividends declared Retaired earnings, December 31 Current assets Investment in Sysinger (equity method) Property, plant, and equipment Patented technology Customer contract Total assets Liabilities Common stock Additional paid-in capital Retained earnings, December 31 Total liabilities and equities Allan Company $ (965,900) 637,900 (51,539) (50,560) $ 430,098 $ (963,000) (430,098) 139,800 $12,253,298) $ 297,300 1,700,738 844,000 868, 600 $ 158,000 $ (632,000) (158,000) 42,000 $ (748,000) $ 568,600 0 611,000 393,500 0 $ 2,563, 100 $ (87.100) (520,000) (200,000) (748,000) $11,563, 100) $ 3,700, 639 $12,329,340) (916,000) (202,000) (2,253,299) $ (3,700, 639) a. How should Allan allocate Sysinger's total acquisition-date fair value (January 1, 2021) to the assets acquired and liabilities assumed for consolidation purposes? b. Calculate the following as they would appear in Allan's pre-consolidation 2021 statements. Equity in earnings of Sysinger Gain on revaluation of Investment in Sysinger to fair value Investment in Sysinger C. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2021. At year-end, there were no intra-entity receivables or payables. Req A Req B1 Req B2 Reg 3 Required How should Allan allocate Sysinger's total acquisition-date fair value (January 1, 2021) to the assets acquired and liabilities assumed for consolidation purposes? Fair value of Sysinger 1/1/21 Book value of Sysinger 1/1/21 Excess fair value over book value To customer contract To goodwill $ 1,778,000 1,360,000 418.000 415.000 IS 3,000 Req A Reg 1 Red B2 Reg 3 Required Calculate the Equity in earnings of Sysinger in Allan's pre-consolidation 2021 statements. IS 2021 net income Amortization Equity in earnings of Sysinger 150.100 98.563 51,538 $ Req A Req B1 Req B2 Reg B3 Required C Calculate the Gain on revaluation of Investment in Sysinger to fair value in Allan's pre-consolidation 2021 statements. IS Consideration transferred 2020 net income 2020 dividends Book value at 1/1/21 Fair value at 1/1/21 Gain on revaluation 204,500 16,605 (4.965) 216.149 266,700 50.580 IS Req A Red B1 Req B2 Req B3 Required C Calculate the Investment in Sysinger in Allan's pre-consolidation 2021 statements. $ 266,700 1.422.400 Fair value at 1/1/21 Consideration transferred 1/1/21 Equity earnings 2021 Net income Customer contract amortization Dividends Investment in Sysinger 12/31/21 150.100 (98,563) 51,538 (39,900) $ 1,700.738 Noncontrolling ALLAN AND SYRINGER Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Allan Sya nger Debit Company Company Credit S (965.900) $ 400,000) 637.900 242,000 103.750 (51,538) 0 51,538 (50.500) 0 $430,098 $ (158,000) Consolidated Totals $ (1.365.900) 983,050 50,560 $ 2.713 S $ Accounts Revenues Operating expenses Equity earnings of Sysinger Gain on revaluation of Investment in Sysinger to fair value Separate company net income Consolidated net income Ni attributable to noncontrolling interest Ni attributable to Allan Company Retained earnings, January 1 Net income Dividends declared Retained earnings. December 31 Current assets Investment in Sysinger (equity method) Property, plant, and equipment Patented technology Customer contract Goodwill Total assets 632.000 S 963.000) (430.098) 139.800 432.810 2,713 430,097 (963,000) (430,098) 139,800 $ (632.000) (158,000) 42.000 39.900 2.100 S 1748.000) $ 1.253.200 S 855.900 39.900 1.740.638 (1 253 298) $287.300 1.700.738 844,000 868,600 0 $ 568,600 0 611,000 383.500 0 oooOOOOOOOOOOOOOOO 103,750 415.000 3.000 1,455,000 1.252.100 311.250 3,000 3,877,250 0 S 1.563 100 IS $ 1.416,440 Liabilities $ 3.700.638 5 1329 340) (916,000) (202.000) (1.253 298) 0 0 S (87100) (520,000) (208,000) (748,000) 0 Common stock Additional paid in capital Retained earnings, December 31 NCI in Sysinger, 1/1 NCI in Sysinger, 12/31 Total abilities and equities 520,000 208.000 (916,000) (202,000) (1.253,298) B8 900 88.900 89.513 0 $ 89.513 (865,345) IS 13.700.638 1563 100) 1.973.188