Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $778,400 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $973,000 although Sierra's book value was only $674,000. 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 $ 60,200 293,000 198,000 (204,000) Fair Value $ 310,200 242,000 282,000 (188,000) 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, 2018, for both companies. $ Padre $ (1,461,980) 739,000 345,000 Sierra (669,550) 420,000 10,500 9,900 6,150 $ $ $ 49,500 (177,520) (506,000) (1,315,000) (506,000) 260,000 (1,561,000) 885,080 903,920 322,000 975,000 Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 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 (223,000) (514,000) (223,000) 65,000 (672,000) 695,200 $ $ $ $ $ $ 3,086,000 (260,000) (515,000) (300,000) (450,000) (1,561,000) (3,086,000) 60,200 282,500 188,100 1,226,000 (190,000) (204,000) (100,000) (60,000) (672,000) (1,226,000) $ $ At year-end, there were no intra-entity receivables or payables. 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 Noncontrolling Interest Consolidated Totals PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2018 Consolidation Entries Padre Sierra Debit Credit $(1,461,980) $ (669,550) 739,000 420,000 345,000 10,500 9,900 49,500 6,150 (177,520) 01 $ (506,000) $ (223,000) 1 $ Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Separate company net income Consolidated net income NI to noncontrolling interest Nl to Padre Company Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 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 12/31 (above) Total liabilities and stockholders' equity $(1,315,000) (506,000) 260,000 $ (1,561,000) $ 885.080 903,920 322,000 975,000 $ (514,000) (223,000) 65,000 $ (672,000) $ 695,200 60,200 282,500 188,100 $ 1,226,000 $ (190,000) (204,000) $ 3,086,000 $ (260,000) (515,000) | $ 0 (300,000)| (450,000) (1,561,000) $ (3,086,000) (100,000) (60,000) (672,000) $(1,226,000) $
