On January 1, 2020, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $384,600. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $227,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $256,400. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $78,400 and an unrecorded customer list (15-year remaining life) assessed at a $54,300 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, McIlroy 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	Cost to McIlroy	Transfer Price to Stinson	Ending Balance (at transfer price)
2020	$127,200	$159,000	$53,000
2021	112,500	150,000	37,500

The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow:

	McIlroy, Inc.				Stinson, Inc.
Sales	$	(732,000	)		$	(367,000	)
Cost of goods sold		481,100				224,200
Operating expenses		197,185				76,400
Equity in earnings in Stinson		(34,189	)			0
Net income	$	(87,904	)		$	(66,400	)
Retained earnings, 1/1/21	$	(774,600	)		$	(282,800	)
Net income		(87,904	)			(66,400	)
Dividends declared		47,900				18,600
Retained earnings, 12/31/21	$	(814,604	)		$	(330,600	)
Cash and receivables	$	277,400			$	150,500
Inventory		260,500				131,200
Investment in Stinson		423,453				0
Buildings (net)		338,000				205,300
Equipment (net)		241,300				89,100
Patents (net)		0				23,600
Total assets	$	1,540,653			$	599,700
Liabilities	$	(426,049	)		$	(169,100	)
Common stock		(300,000	)			(100,000	)
Retained earnings, 12/31/21		(814,604	)			(330,600	)
Total liabilities and equities	$	(1,540,653	)		$	(599,700	)

(Note: Parentheses indicate a credit balance.)

1. Show how McIlroy determined the $423,453 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinsons income.

2. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2021.