Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1 2015, for $778,080 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $972,600 although Sierra's book value was only $604,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Fair Value $ 66,700 S 323,700 Land Buildings and equipment (10-year remaining life) 332,000 318,000 129,000 239,000 Copynight (20-year life) Notes payable (due in 8 148 132 For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2015, for both companies. Sierra Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra $(1,488,840) (605,850) 380,000 13,500 6,450 5,900 790,000 294,000 48,000 (155,160) Net income $ (512,000) (200,000) Retained earnings, 1/1/15 Net income (above) $(1,500,000) (444,000) (512,000) (200,000) 65,000 260,000 Retained earnings, 12/31/15 $(1,752,000) (579,000) Current assets Investment in Sierra $ 1,073,760 $619,250 881,240 66,700 318,500 122,550 Buildings and equipment (net) 925,000 Total assets $ 3,268.000 1,127,000 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) $ (266,000) (240,000) (500,000 148,000) (300,000) 450,000) (100,000) (60,000) (1,752,000) (579,000) Total liabilites and equites $(3,268,000) $,127,000) At year-end, there were no intra-entity receivables or payables. Using the acquisition method, prepare the worksheet to consolidate these two companies. RE INC. AND SIERRA COR Consolidated Worksheet For Year Ending December 31, 2015 Consolidation Entries Noncontrolling Consolidated Accounts Padre Sierra Debit Credit Totals (1,488,840)(605,850) 380,000 13,500 6,450 5,900 (2,094,690) 1,170,000 306,100 11,450 Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Siera Separate company net income Consolidated net income NCI in consolidated net income Controlling interest in CNI 90,000 294,000 1,400 (5,000) 48,000 (155,160 (512,000) 200,000 (1,500,000444,000) (512,000)(200,000) 65,000 579,000 619,250 (607,140) (607,140) (512,000) (512,000) amings 1/1 Net income (above) Dividends declared 260,000 (1,752,000 1,073,760 881,240 388,000 925,000 eamings 12/31 Current assets 1,693.010 Investment in Sierra 66,700 318,500 122,550 3.268,000127,000 (266,000)(240,000) (500,000)148,000) Buildings and equipment (net) 1,693,010 506,000) Total assets Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 Common stock Additional paid-in capital Retained earnings 12/31 (above) Total liabilities and stockholders' equity (300,000)100,000) (450,000) (60,000 (1,752,000(579,000) 3.268,000127,000 100,000 60,000 (300,000) 450,000) (1,752,000) 155,000 1,400 3,008,000