Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $706,560 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $883,200 although Sierra's book value was only $608,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Fair Value Book Value $ 221,500 Land 66,500 Buildings and equipment (10-year remaining life) Copyright (20- Notes payable (due in 8 years) 369,000 164,000 (139,000) 334,000 Jaud Tot emaining life) 308,000 (127,800) 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, 2018, for both companies. Padre Sierra (1,477,280) (653,150) Revenues Cost of goods sold Depreciation expense Amortization expense 767,000 350,000 419,000 16,000 8,200 5,950 Interest expense 50,400 (159,120) Equity in income of Sierra 0 $ (469,000) $ (204,000) Net income (1,430,000) (469,000) 260,000 (1,639,000) (448,000) (204,000) 65,000 (587,000) Retained earnings, 1/1/18 Net income Dividends declared $ Retained earnings, 12/31/18 $ Current assets 478,700 1,034,320 Investment in Sierra 813,680 330,000 934,000 0 Land 66,500 353,000 Buildings and equipment (net) Copyright 155,800 $ Total assets 3,112,000 1,054,000 $ (199,000) (524,000) (300,000) (450,000) (1,639,000) (3,112,000) (168,000) (139,000) (100,000) (60,000) (587,000) (1,054,000) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities At year-end, there were no intra-entity receivables or payables. +A+A tA +A tA Using the acquisition method, prepare the worksheet to consolidate these two companies. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2018 Consolidation Entries Noncontrolling Interest Consolidated Accounts Padre Sierra Debit Credit Totals Revenues $ (653,150) $ (2,130,430) $(1,477,280) 1,186,000 Cost of goods sold 767,000 419,000 362,500 3,500 Depreciation expense 350,000 16,000 7,200 Amortization expense 0 8,200 15,400 50,400 Interest expense 5,950 1,400 57,750 159,120 Equity in income of Sierra (159,120) $ (204,000) (469,000) Separate company net income Consolidated net income (508,780) NI to noncontrolling interest 39,780 NI to Padre Company $ (469,000) $ (448,000) 448,000 (1,430,000) Retained earnings 1/1 1,430,000 Net income (above) (469,000) (204,000) 469,000 Dividends declared 260,000 65,000 (260,000) S (587,000) $(1,639,000) 1,639,000 Retained earnings 12/31 1,513,020 Current assets 1,034,320 478,700 S 813,680 0 Investment in Sierra 551,500 66,500 155,000 Land 330,000 Buildings and equipment (net) 1,255,500 934,000 353,000 35,000 292,600 155,800 Copyright 155,800 1,054,000 3,612,620 3,112,000 S Total assets Accounts payable $ (199,000) 367,000 (168,000) S Notes payable 653,200 (524,000) (139,000) 11,200 NCI in Sierra 1/1 203,420 NCI in Sierra 12/31 203,420 S 203,420 (300,000) 300,000 Common stock (100,000) Additional paid-in capital (450,000) (60,000) 450,000 Retained earnings 12/31 (above) 1,639,000 (587,000) (1,639,000) $ 171,220 Total liabilities and stockholders' equity (3,112,000) 805.000 3,612,620 (1,054,000)