Pacquired $90\%$ of $S\text{'}$s stock of $S$ on $\frac{1}{1}\frac{?}{?}1$ for $$430,000$ when it was selling for $$\frac{21}{?}$ share.

S balance sheet on $\frac{1}{1}\frac{?}{?}1$ :

$\backslash$table$[[$ASSETS$,$LIAB & SE$],[CASH,10,000,$CURRENT LLAB,$30\mathrm{.}000],[$ACCTS REC,$25,000,$COMMON STOCK,$100,000],[$INVENTORY$,90,000,$PIC,$15,000],[$TOTAL CA$,125,000,\frac{R}{E},60,000],[$BUILDING$,80,000,$TOTAL SE$,175,000],[$TOTAL ASSETS,$\frac{?}{\text{b}\text{a}\text{r}}(205,000),$TOTAL LIAB & SE$,205,000]]$

Market values were equal to book values, except the building has a market value of $220,000.$ The building had a remaining useful life of $20$ years.

P$\text{'}$s share of the Goodwill implied in the purchase price was $$146,500.$ The fair value of $NCl$ was $$42,000.$ The resulting value of goodwill for the total company was $$157,000$

During $20$x$1$: S declared dividends of $$30,000$ of which $$10,000$ was unpaid at year end. $S$ reported income of $$100,000.$

At year end, goodwill is reviewed for impaiment and its value is determined to be $$141,300.$

Under the equity method, $P$ would have reported income from $S$ calculated as follows:

P share of reported profits $$90,000$

Depreciation adjustment

$(6,300)$

Goodwill amortization

$(14,130)$

$$69,570$

You now know how to handle the consolidation under the assumption that $P$ uses the equity method and reports INCOME FROM S of $69,570$ in the income statement.

Assume that $P$ uses the cost method instead. Make all joumal entries on P$\text{'}$s books for $201.$