On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $372,000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $220,000. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $248,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $70,000 and an unrecorded customer list (15-year remaining life) assessed at a $45,000 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 2020 2021 Cost to McIlroy $120,000 112,000 Transfer Price to Stinson $150,000 160,000 Ending Balance (at transfer price) $50,000 40,000 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: Stinson, Inc. $ (335,000) 205,000 70,000 Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities McIlroy, Inc. $ (700,000) 460,000 188,000 (28,000) $ (80,000) $ (695,000) (80,000) 45,000 $ (730,000) $ 248,000 233,000 411,000 308,000 220,000 $ (60,000) $ (280,000) (60,000) 15,000 $ (325,000) $ 148,000 129,000 0 202,000 86,000 20,000 $ 585,000 $ (160,000) (100,000) (325,000) $ (585,000) $ 1,420,000 $ (390,000) (300,000) (730,000) $(1,420,000) (Note: Parentheses indicate a credit balance.) a. Show how Mcllroy determined the $411,000 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, 2021. Complete this question by entering your answers in the tabs below. Required a Required B Show how McIlroy determined the $411,000 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. (Amounts to be deducted should be indicated with a minus sign.) $ 372,000 $ 36,000 (7,104) Consideration transferred Increase in Stinson's retained earnings 1/1/20 to 1/1/21 Excess fair value amortization 2020 ending inventory profit deferral Mcllroy's equity in earnings of Stinson for 2021 Stinson 2021 dividends declared to Mcllroy 28,896 $ 400,896 MCILROY, INC., AND STINSON, INC. Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Mcllroy Stinson Debit Credit NCI Consolidated Totals $ (700,000) $ 460,000 188,000 (28,000) (80,000) $ (335,000) 205,000 70,000 0 $ (60,000) $ Sales Cost of goods sold Operating expenses Equity in earnings of Stinson Separate company net income Consolidated net income To noncontrolling interest To Mcllroy, Inc. Retained earnings 1/1/21 Net income Dividends declared Retained earnings 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Customer list Goodwill Total assets Liabilities Common stock Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 Retained earnings 12/31/21 Total liabilities and equities (280,000) (60,000) 15,000 (325,000) 148,000 129,000 $ (695,000) (80,000) 45,000 (730,000) $ 248,000 $ 233,000 411,000 308,000 220,000 0 202,000 86,000 20,000 0 $ 1,420,000 $ (390,000) (300,000) 585,000 (160,000) (100,000) (730,000) (1,420,000 $ (325,000) (585,000) $ $ 0 0