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P Inc. purchased 80% of the voting shares of S Inc for $750,000 on January 1, 2018. On that date, S's common shares and retained

P Inc. purchased 80% of the voting shares of S Inc for $750,000 on January 1, 2018. On that date, S's common shares and retained earnings were valued at $300,000 and $150,000 respectively. Unless otherwise stated, assume that P uses the cost method to account for its investment in S Inc. S's fair values approximated its carrying values with the following exceptions:

S's trademark had a fair value which was $80,000 higher than its carrying value. S's bonds payable had a fair value which was $30,000 higher than their carrying value. The trademark had a useful life of exactly twenty years remaining from the date of acquisition. The bonds payable mature on January 1, 2038. Both companies use straight line amortization exclusively. The financial statements of both companies for the year ended December 31, 2020 are shown below: Income Statements

P Inc. S Inc.
Sales $640,000 $520,000
Other Revenues $460,000 $160,000
Less: Expenses
Cost of Goods Sold $480,000 $390,000
Depreciation Expense $40,000 $20,000
Other Expenses $80,000 $40,000
Income Tax Expense $250,000 $115,000
Net Income $250,000 $115,000

Retained Earnings Statements

P Inc. S Inc.
Balance, January 1, 2020 $200,000 $350,000
Net Income $250,000 $115,000
Less: Dividends ($50,000) ($65,000)
Retained Earnings, Dec 31, 2020 $400,000 $400,000
Balance Sheets
P Inc. S Inc.
Cash $100,000 $150,000
Accounts Receivable $150,000 $150,000
Inventory $200,000 $150,000
Investment in MIN Inc. $750,000
Equipment (net) $300,000 $150,000
Land $100,000
Trademark $300,000
Total Assets $1,500,000 $1,000,000
Current Liabilities $300,000 $150,000
Bonds Payable $300,000 $150,000
Common Shares $500,000 $300,000
Retained Earnings $400,000 $400,000
Total Liabilities and Equity $1,500,000 $1,000,000

Other Information: A goodwill impairment test conducted during August 2020 revealed that the S's goodwill amount on the date of acquisition had been impaired by $5,000. During 2019, P sold $60,000 worth of inventory to S, 80% of which was sold to outsiders during the year. During 2020, P sold inventory to S for $80,000. 75% of this inventory was resold by S to outside parties during that year. During 2019, S sold $40,000 worth of Inventory to P, 80% of which was sold to outsiders during the year. During 2020, S sold inventory to P for $50,000. 80% of this inventory was resold by P to outside parties during that year. On April 1, 2020, P sold land to S for $100,000. P originally acquired the land for $40,000 in 2015. All intercompany sales as well as sales to outsiders are priced 25% on sales. The effective tax rate for both companies is 50%.

Required:

a) Prepare a schedule, in good form, and compute P's goodwill and the Non Controlling Interests (NCI) at the date of acquisition.

b) Prepare, in good form, the Acquisition Differential Amortization / Impairment Schedule for the year ended December 31, 2020

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