On January 1, 2020, Wondersome Company acquired a 70% interest in Philmore Company for a purchase price that was $240,000 over the book value of the Philmores Stockholders Equity on the acquisition date. Wondersome uses the equity method to account for its investment in Philmore. Wondersome assigned the acquisition-date AAP as follows:

Chapter 5 Quiz On January 1, 2020, Wondernome Company acquired a 70% interest in Philmore Company for a purchase price that was $240,000 over the book value of the Philmore's Stockholders' Equity on the acquisition date. Wondersome uses the equity method to account for its investment in Philmore. Wondersome assigned the sequisition date AAP as follows: AAP Items Initial Fair Unni Value years) PPE, net $90,000 20 Patent 150,000 10 $240,000 Philmore bolls inventory to Wondersome (upstream) which includes that inventory in products that it ultimately, sells to customers outside of the controlled group. You have compiled the following data for the years ending 2022 and 2023 Transfer price for inventory sale Cost of goods sold Gross profit * inventory remaining Gross prof deferred 2022 594,500 -14,000 $30,000 30% $9,000 2023 $70,000 45,000 $25,000 20% 55,000 EOY ReceivablePuyable $32,000 $29.500 Inventory not remaining at the end of the year has been sold outside of the controlled group. The parent and the subsidiary report the following financial statements at December 31, 2023: Income Statement Wondersome Sales $2.400,000 Cost of goods sold -1,500,000 Gross Profit 820,000 Income (105) from subsidiary 45,051 Operating expenses -711,200 Net income 3154.851 Philmore $662.400 -465.398 137.002 -56,000 $81.602 Statement of Retained Earnings Wondersome BOY Retained Earnings $3.500,000 Not income 154,851 Dividenda 95,000 LOY Retained Earings $3,319,051 Philmore $668 000 81,002 -15.000 $674,002 Balance Sheet Wondersome Philmore Assets: Cash Accounts receivable Inventory Equity Investment PPE, net $84.700 113 200 142.100 $450,000 425,000 654,000 803,251 4.438.400 $6.770,651 1.000.002 $1.240,002 Liabilities and Stockholders' Equity Current Liabilities Lang-term Liabilities Common Stock APIC Retained Earnings 5505,900 703,500 402,000 1.589,800 3.549,851 $6.770.551 $99.500 250.000 75,300 241,200 674,002 $1.440.002 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAPI. the controlling interest AAP and the noncontrolling interest AAP.(Complete for the first four years only) SKIP a Instructions above and instead complete the table below: Initial Fair Value Annual Amortization #Years Cumulative Amortization Useful Life Unamortiz ed AAP 12/31/23 Unamortized AAP 11/23 AAP AA (Aeg 1/1/20) PPE Patent p% INCIS. b. Calculate and organize the profits and losses an intercompany transactions and balances Downstream Upstream Intercompany profit 2023 Intercompany profit 2022 e. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Use a negative sign with your answer to indicate a reduction to net income. 11112023 12/31/2028 APIC Common stock RIE BOY Equity Investment at 1/123: p% book value of the net assets of subsidiary Add: un amortized (p') AAP Lap of upstream defered intercompany profits Equity investment at 12/31/23 px x book value of the net assets of subsidiary Add: unamortized (p%) AAP Less: px of upstream detered Intercompany profits d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. Equity Investment Dr. Cr. Equity Investment at 1/1/9 Equity Investment at 12/31/18 Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Le negative sign with your newer to indicate a reduction to net income, Noncontrolling interest at 11119: NCI" of book value of the net assets of subsidiary Add: |Las: Noncontrolling Interest at 12/31/16 NCI% of book value of the nel sets of subsidiary Add: f. Independently calculate consolidated net income, controlling interest nat income and noncontrolling interest net income Use a negative sign with your answer to indicate a reduction to net income. Parent's stand-alone net Income Subsidiary's stand-alone net Income Plus: Less: Less: Consolidated net income Parent's stand-alone net income p% of subsidiary's stand-alone nat incomo Plus: |LH55: Leas: Equity income Consolidated net income attributable to the controlling interest nci% of subsidiary's stand-alone nat income Plus: Less: Consolidated net income attributable to NCI . Complete the consolidating entries socording to the C-E-A-D-sequence Dr. Cr. [C] [E] [A] [D] Ilusal [kg] I. h. Complete the Consolidation worksheet in next tab. Parent Subsidiary Consolidation Entries Der Cr Consolidated Income Statement: Sales Cost of Goods sold 2,400.000 11,580,000 OZ,400 1465,3941 3,00 400 12,045,398) 137,002 Gross profit Income loan from subsidiary Operating expenses Net Income Consolidated Ni attributable to NCI Consolidated Ni attributable to Pamunt 820,000 45,451 17.11.200 154,651 (56,000 81,002 957,002 4551 1767 200 215,451 235,453 Statement of Retraming BOY retained earnings Net Income Dividends EOY retained earnings 3,500,000 154,451 65.000) 3,589,651 608,000 81,000 (15.000 674,000 4,100,000 2154451 1100.000) 4,248,653 Balance Sheet: Accounts receivable Inventory rquity investment 450,000 425,000 654,000 800,251 84,700 113,200 142,100 534,700 538.200 796,100 200,251 4,439,400 1,000,002 PPE, net Patem Goodwill 5,438,402 o 6770451 1,340,000 8,110,651 Currentlisbilities Long-term liabilities Common stock APK Retained warning Nancontrolling interest 505,000 708,500 402,000 1,589,600 3,564,651 99,500 250,000 75,300 241,200 674,062 605400 953,500 477,200 1,830,800 4,243,453 6.770,651 1.340,002 0 8110453