On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $312,000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $184,400. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $208,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $83,200 and an unrecorded customer list (15-year remaining life) assessed at a $58,800 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 Cost to McIlroy $132,900 113,100 Transfer Price to Stinson $166,125 150,800 Ending Balance (at transfer price) $55,375 37,700 2021 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: 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. $ (747,eee) 490,900 200,590 (35,946) $ (91,456) $ (814,500) (91,456) 49,780 $ (856,256) $ 291,900 274,200 377,467 353,000 251,900 @ $ 1,548,467 $ (392,211) (300,000) (856, 256) $(1,548,467) Stinson, Inc. $ (382,000) 233,200 79,480 @ $ (69,480) $ (284,300) (69,400) 20,000 $ (333,700) $ 151,908 132,400 @ 207,200 90,600 25,300 $ $ 607,488 $ (173,700) (100,000) (333,700) $ (607,400) (Note: Parentheses indicate a credit balance.) a. Show how Mcllroy determined the $377,467 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 $377,467 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.) $312,000 $ 59,940 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 Investment account balance 12/31/21 59.940 35,946 $ 407,886 (Required A Required B > On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $312,000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $184,400. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $208,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $83,200 and an unrecorded customer list (15-year remaining life) assessed at a $58,800 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 Cost to McIlroy $132,900 113,100 Transfer Price to Stinson $166,125 150,800 Ending Balance (at transfer price) $55,375 37,700 2021 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: 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. $ (747,eee) 490,900 200,590 (35,946) $ (91,456) $ (814,500) (91,456) 49,780 $ (856,256) $ 291,900 274,200 377,467 353,000 251,900 @ $ 1,548,467 $ (392,211) (300,000) (856, 256) $(1,548,467) Stinson, Inc. $ (382,000) 233,200 79,480 @ $ (69,480) $ (284,300) (69,400) 20,000 $ (333,700) $ 151,908 132,400 @ 207,200 90,600 25,300 $ $ 607,488 $ (173,700) (100,000) (333,700) $ (607,400) (Note: Parentheses indicate a credit balance.) a. Show how Mcllroy determined the $377,467 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 $377,467 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.) $312,000 $ 59,940 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 Investment account balance 12/31/21 59.940 35,946 $ 407,886 (Required A Required B >