On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $412,800. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $244,000. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $275,200. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $85,000 and an unrecorded customer list (15-year remaining life) assessed at a $61,200 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 $135,900 112,800 Transfer Price to Stinson $169,875 150,400 Ending Balance (at transfer price) $56,625 37,600 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. $ (753,000) 494,900 201, 405 (37,097) $ (93,792) $ (815,700) (93,792) 50,400 $ (859,092) 292,100 274,400 443,504 360,000 256,800 Stinson, Inc. $ (391,600) 238,600 81,200 0 $ (71,200) $ (285,400) (71,200) 20,600 $ (336,000) $ 153,000 133,300 $ 1,626,804 $ (467,712) (300,000) (859,092) $(1,626,804) 207,800 91,100 26, 100 $ 611,300 $ (175,300) (100,000) (336,000) $ (611,300) (Note: Parentheses indicate a credit balance.) a. Show how Mcllroy determined the $443,504 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 $443,504 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.) 0 $ 0 Required A Required B >
