On January 1, 20X8, Plane Company acquired 80 percent of Scalar Company's ownership for $120,000 cash. At that date, the fair value of the noncontrolling interest was $30,000. The book value of Scalar's net assets at acquisition was $125,000. The book values and fair values of Scalar's assets and liabilities were equal, except for inventory that had a fair value $10,000 more than book value, buildings and equipment, which were worth $15,000 less than book value, patents that had a fair value $40,000 more than book value, and bonds payable which were worth $20,000 more than book value. Buildings and equipment are depreciated on a 10-year basis, the patents had a remaining economic life of five years, and the bonds payable mature in five years. The inventory was all sold in 20X8. Although goodwill is not amortized, the management of Plane concluded at December 31, 20X8, that goodwill from its acquisition of Scalar shares had been impaired and the correct carrying amount was $5,000. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. No additional impairment occurred in 20X8. Trial balance data for Plane and Scalar on December 31, 20X8, are as follows: $ Scalar Company Debit Credit 30,000 25,000 30,000 25,000 150,000 Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Scalar Co. Cost of Goods Sold Wage Expense Depreciation Expense Interest Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Wages Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scalar SI Pane Company Debit Credit 95,000 60,000 80,000 150,000 300,000 117,200 180,000 50,000 30,000 25,000 40,000 40,000 100,000 34,000 15,000 6,000 21,000 10,000 150,000 36,000 70,000 31,000 180,000 150,000 181,000 400,000 5,200 1,167,200 $ 26,000 9,000 50,000 100,000 25,000 200,000 1,167,200 $ 446,000 $ 446,000 Required: 1) Provide all consolidating entries needed to prepare a three-part consolidation worksheet as of December 31, 20X8. 2) Prepare a three-part consolidation worksheet for 20X8 in good form. $150,000 - $125,000 = $25,000 Book Value Fair Value Differential | Life | Amortization a. Journal entries recorded by Plane Corporation: (1) (2) (3) (4) Investment in Sub Income from Sub Common Stock Retained Earnings NCI Income to NCI b. Eliminating entries: E(1) E(2) E(3) E(4) E(5) Plane Scalar DR CR Consol 400,000 200,000 (180,000 (100,000) (50,000) (34,000) (30,000) (15,000 (25,000 (6,000) (40,000) (21,000) Income Statement Sales Less: Cost of Goods Sold Less: Wage Expense Less: Depreciation Expense Less: Interest Expense Less: Other Expenses Less: Goodwill Impairment Loss Income from Subsidiary Consolidated Net Income NCI in Net Income Controlling Interest Net Income Statement of Retained Earnings Retained Earnings, Jan 1 Net Income (above) 5,200 80,200 24,000 181,000 25,000 (40,000) (10,000) 95,000 60,000 80,000 150,000 30,000 25,000 30,000 25,000 150,000 300,000 (150,000) (36,000) Less: Dividends Declared Retained Earnings, Dec. 31 Balance Sheet Cash Accounts Receivable Inventory Land Patent Buildings & Equipment Less: Accumulated Depreciation Investment in Subsidiary Goodwill Differential Total Assets Accounts Payable Bonds Payable Premium on Bonds Payable Wages Payable Common Stock Retained Earnings 117,200 70,000 180,000 26,000 50,000 31,000 150,000 9,000 100,000 Total Liabilities and Equity