Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, 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: Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Book Value Fair Value $ 66,500 $221,500 369,000 334,000 164,000 300,000 (139,000) (127,000) 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, 2021, for both companies. Padre $(1,477,200) 767,000 350,000 Sierra $ (653,150) 419,000 16,000 8,200 5,950 0 Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Current assets Investment in Sierra: Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable 50,400 (159,120) $ (469,000) $ $(1,430,000) $ (469,000) 260,000 $(1,639,000) (204,000) (448,000) (204,000) 65,000 $ (587,000) $1,034,320 $ 478,700 813,600 330,000 934,000 66,500 353,000 0 155,800 $ 3,112,000 $ 1,054,000 $ (199,000) (524,000) $ (168,000) (139,000) (300,000) (100,000) (60,000) (587,000) Common stock Additional paid-in capital (450,000) Retained earnings (above). (1,639,000) Total liabilities and equities $(3,112,000) $(1,054,000) or payables Consolidated Worksheet For Year Ending December 31, 2021 Consolidation Entries Revenues Cost of goods sold Depreciation expense Accounts Padre Sierra Debit $(1,477,280) $ (653,150) 767,000 419,000 350,000 16,000 0 8,200 50,400 5,950 (159,120) 0 Amortization expense Interest expense Equity in income of Sierra Separate company net income Consolidated net income Ni to noncontrolling interest NI to Padre Company Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities $ (469,000) $ (204,000) $(1,430,000) S (448,000) (469,000) (204,000) 260,000 65,000 $(1,639,000) $ (587,000) $ 1,034,320 $ 478,700 813.680 330,000 934,000 0 0 66,500 353,000 155,800 $ 3.112.000 $ 1,054,000 $ (199,000) 5 (168,000) (524,000) (139,000) (100,000) (300,000) (450,000) (60,000) (1,639,000) (587,000) $ (3,112,000) $(1,054,000) Credit Noncontrolling Interest Consolidated Totals < Prev 2 of 2 Next 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, 2021, for both companies. Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities Padre $(1,477,280) 767,000 350,000 50,400 (159,120) Sierra $ (653,150) 419,000 16,000 8,200 5,950 $ (469,000) $ (204,000) $(1,430,000) $ (448,000) $(1,639,000) $ 1,034,320 (469,000) 260,000 (204,000) 65,000 $ (587,000) $ 478,700 813,680 330,000 e 66,500 934,000 0 $ 3,112,000 $ (199,000) (524,000) (300,000) (450,000) (1,639,000) $(3,112,000) 353,000 155,800 $ 1,054,000 $ (168,000) (139,000) (100,000) (60,000) (587,000) $(1,054,000) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate the financial statements of 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. Input all amounts as positive values.) PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2021 Consolidation Entries