On January 1,2018, River Corp. purchased 100.00% of the net assets of Shark Corp. for $250,000. The write-up of the Buildings and Equipment from book value to fair market value amounted to 55.00% of the total differential. The write-up of the Land from book value to fair market value amounted to 10.00% of the total differential. The remaining 31.00% of the total differential is attributable to Goodwill. The remaining useful life of the Buildings and Equipment is assumed to be 10 years. Goodwill is impaired at the end of 2018 and 2019 and must be written down, each year, by 11.00% of its original (initial) value. The company uses the equity method approach to account for the goodwill impairment A complete set of financial statements for fiscal years 2018 and 2019 for River Corp. is in Chart 1. A complete set of financial statements for fiscal years 2018 and 2019 for Shark Corp is in Chart 2 a) Based on the purchase price, calculate the total differential (in dollars), as well as the differential (in dollars) applied to i) Buildings and Equipment, ii) Land and iii) Goodwill (SHOW ALL WORK IN THE CALCULATION). b) For fiscal year 2018, provide ALL journal entries (and t-accounts) used by River Corp. company to account for its investment in the subsidiary using the equity method. c) For fiscal year 2018 provide ALL eliminating entries (and t-accounts) necessary to create consolidated financial statements. d) For fiscal year 2018, create consolidated financial statements using the 3-step consolidation worksheet Chart 1 River Corp 12/31/18 River Corp 12/31/19 $1,025,500 732,500 36,625 109,875 146,500 212,654 1,128,050 805,750 36,625 120,863 164,813 237,822 Income Statement Sales Cost of Goods Sold Other Expenses Company Net Income Income from Subsidiary (Shark) Net Income Statement of Retained Earnings Retained Earnings 1/1/X7 Net Income (from Above) Dividends Declared Retained Earnings 12/31/X7 Balance Sheet Cash Accounts Receivable Inventory Land Build and Equipment-HC Account Depreciation Build and Equipment-Net 290,000 212,654 73,250 429,404 429,404 237,822 118,911 548,315 384,840 102,550 256,375 117,200 732,500 166,625 565,875 472,599 112,805 282,012 117,200 732.500 203,250 529,250 262,464 304,603 Investment in Subsidiary (Sanchez) Goodwill Differential Total Assets Accounts Payable Bonds Payable Total Liabilities 1,689,304 102,550 571,350 673,900 1,818,470 112,805 571,350 684,155 Shareholder's Equity Common Stock 586,000 Retained Earnings (from above) 429,404 Total Shareholder's Equity 1,015 404 586,000 548,315 1,134,315 1,689,304 1,818470 Total Liabilities + Total Shareholder's Equity Balance Chart 2 Shark Corp 12/31/18 Shark Corp 12/31/19 Income Statement Sales 586,000 615,300 Income from Subsidiary 615,300 38 1486 21,975 115,369 96 470 205,100 Total Sales 586,000 Cost of Goods Sold 366250 Depreciation and Amortization 21,975 Other Expenses 109,875 Net Income 87,900 Statement of Retained Earnings Retained Earnings (Beginning of 146,500 Year) Net Income (from Above) 87,900 Dividends Declared 73,250 Retained Earnings (End of Year) 205,100 Balance Sheet Cash 36,625 Accounts Receivable 80,575 Inventory 146,500 Land 29,300 96 470 38,588 262,982 69 236 92 295 184,590 29,300 Build and Equipment HC Account Depreciation Build and Equipment-Net Total Assets Accounts Payable Bonds Payable Total Liabilities Shareholder's Equity Common Stock Retained Earnings (from above) Total Shareholder's Equity Total Liabilities + Total Shareholder's Equity Balance 219,750 109,875 109,875 402,875 51,275 73,250 124,525 219,750 131,850 87,900 463,321 53,839 73,250 127,089 73,250 205,100 278,350 73 250 262,982 336,232 336,232 402,875 On January 1,2018, River Corp. purchased 100.00% of the net assets of Shark Corp. for $250,000. The write-up of the Buildings and Equipment from book value to fair market value amounted to 55.00% of the total differential. The write-up of the Land from book value to fair market value amounted to 10.00% of the total differential. The remaining 31.00% of the total differential is attributable to Goodwill. The remaining useful life of the Buildings and Equipment is assumed to be 10 years. Goodwill is impaired at the end of 2018 and 2019 and must be written down, each year, by 11.00% of its original (initial) value. The company uses the equity method approach to account for the goodwill impairment A complete set of financial statements for fiscal years 2018 and 2019 for River Corp. is in Chart 1. A complete set of financial statements for fiscal years 2018 and 2019 for Shark Corp is in Chart 2 a) Based on the purchase price, calculate the total differential (in dollars), as well as the differential (in dollars) applied to i) Buildings and Equipment, ii) Land and iii) Goodwill (SHOW ALL WORK IN THE CALCULATION). b) For fiscal year 2018, provide ALL journal entries (and t-accounts) used by River Corp. company to account for its investment in the subsidiary using the equity method. c) For fiscal year 2018 provide ALL eliminating entries (and t-accounts) necessary to create consolidated financial statements. d) For fiscal year 2018, create consolidated financial statements using the 3-step consolidation worksheet Chart 1 River Corp 12/31/18 River Corp 12/31/19 $1,025,500 732,500 36,625 109,875 146,500 212,654 1,128,050 805,750 36,625 120,863 164,813 237,822 Income Statement Sales Cost of Goods Sold Other Expenses Company Net Income Income from Subsidiary (Shark) Net Income Statement of Retained Earnings Retained Earnings 1/1/X7 Net Income (from Above) Dividends Declared Retained Earnings 12/31/X7 Balance Sheet Cash Accounts Receivable Inventory Land Build and Equipment-HC Account Depreciation Build and Equipment-Net 290,000 212,654 73,250 429,404 429,404 237,822 118,911 548,315 384,840 102,550 256,375 117,200 732,500 166,625 565,875 472,599 112,805 282,012 117,200 732.500 203,250 529,250 262,464 304,603 Investment in Subsidiary (Sanchez) Goodwill Differential Total Assets Accounts Payable Bonds Payable Total Liabilities 1,689,304 102,550 571,350 673,900 1,818,470 112,805 571,350 684,155 Shareholder's Equity Common Stock 586,000 Retained Earnings (from above) 429,404 Total Shareholder's Equity 1,015 404 586,000 548,315 1,134,315 1,689,304 1,818470 Total Liabilities + Total Shareholder's Equity Balance Chart 2 Shark Corp 12/31/18 Shark Corp 12/31/19 Income Statement Sales 586,000 615,300 Income from Subsidiary 615,300 38 1486 21,975 115,369 96 470 205,100 Total Sales 586,000 Cost of Goods Sold 366250 Depreciation and Amortization 21,975 Other Expenses 109,875 Net Income 87,900 Statement of Retained Earnings Retained Earnings (Beginning of 146,500 Year) Net Income (from Above) 87,900 Dividends Declared 73,250 Retained Earnings (End of Year) 205,100 Balance Sheet Cash 36,625 Accounts Receivable 80,575 Inventory 146,500 Land 29,300 96 470 38,588 262,982 69 236 92 295 184,590 29,300 Build and Equipment HC Account Depreciation Build and Equipment-Net Total Assets Accounts Payable Bonds Payable Total Liabilities Shareholder's Equity Common Stock Retained Earnings (from above) Total Shareholder's Equity Total Liabilities + Total Shareholder's Equity Balance 219,750 109,875 109,875 402,875 51,275 73,250 124,525 219,750 131,850 87,900 463,321 53,839 73,250 127,089 73,250 205,100 278,350 73 250 262,982 336,232 336,232 402,875