On January 1, 2020, James Company purchased 100 percent of the outstanding voting stock of Nolan, Inc., for $1,000,000 in cash and other consideration. At the purchase date, Nolan had common stock of $500,000 and retained earnings of $185,000. James attributed the excess of acquisition-date fair value over Nolan's book value to a trade name with an estimated 25-year remaining useful life. James uses the equity method to account for its investment in Nolan. During the next two years, Nolan reported the following: 20201 2021 Income $78.000 85,000 Dividends Declared $25.000 27,000 Inventory Transfers to James at Transfer Price $190,000 210.000 Nolan sells inventory to James after a markup based on a gross profit rate of 60%. At the end of 2020 and 2021, 30 percent of the current year purchases remain in James's inventory. Using the attached Excel template, compute the following: 1. The Equity Method balance in James' Investment in Nolan, Inc., account as of December 31, 2021 2. Worksheet adjustments for the December 31, 2021 adjustments of James and Nolan. Use the following Codes to designate the purpose of the joumal entry: Con ("G) Recognition of inity beginning inventory constidende. Dowributed to t (A) Allocation of far vale over subsidy's book vala, saoired bal Elimination of intre-ly income (D) Ention of y desal in Recognition of antin pee for cat year once fair as diced to de Eat of intentity wapya (T) Eination of inity sales (G) Defecal of inity ending inventory effort period of any gre pri from ending inventory Formulate your solution so that Nolan's gross profit rate on sales to James is treated as a variable. B D 2 Fair Value Allocation 3 Consideration Transferred 4 Common Stock 5 Retained Earnings 6 7 Tradename 8 9 Intra-entity Inventory Transfers (upstream). 10 11 12 13 14 15 1/1/20 Sales Inventory Intra.Profit 2020 2021 Investment Account 16 Cost 17 2020 Equity Earnings 18 Dividends 19 12/31/2020 Balance 20 21 2021 Equity Earnings 22 Dividends 23 12/31/2021 Balance 24 25 26 Equity in Nolan Company Earnings 27 2020 Reported Net Income 28 El Profit 29 Amortization 30 Equity Earnings 31 9 32 2021 Reported Net Income 33 BI Profit to 34 El Profit 35 Amortization 36 Equity Earnings ft 37 38 h39 40 41 42 43 E F