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Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $751,680 cash. At the acquisition date, Sierra's
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $751,680 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $939,600 although Sierra's book value was only $683,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: 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. \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{7}{|c|}{ Consolidated Worksheet } \\ \hline \multicolumn{7}{|c|}{ For Year Ending December 31, 2021} \\ \hline \multirow[b]{2}{*}{ Accounts } & \multirow[b]{2}{*}{ Padre } & \multirow[b]{2}{*}{ Sierra } & \multicolumn{2}{|c|}{ Consolidation Entries } & \multirow[b]{2}{*}{NoncontrollingInterest} & \multirow[b]{2}{*}{ConsolidatedTotals} \\ \hline & & & Debit & Credit & & \\ \hline Revenues & $(1,431,820) & $(635,250) & & & & $(2,067,070) \\ \hline Cost of goods sold & 764,000 & 414,000 & & & & 1,178,000 \\ \hline Depreciation expense & 293,000 & 12,600 & & 2,300 & & 303,300 \\ \hline Amortization expense & 0 & 5,250 & 3,500 & & & 8,750 \\ \hline Interest expense & 48,500 & 6,400 & 1,200 & & & 56,100 \\ \hline Equity in income of Sierra & (155,680) & 0 & 155,680 & & & ( \\ \hline Separate company net income & $(482,000) & $(197,000) & & & & \\ \hline Consolidated net income & & & & & & $(520,920) \\ \hline NI to noncontrolling interest & & & & & (38,920)( & 38,920 \\ \hline NI to Padre Company & & & . & & & 482,000 \\ \hline Retained earnings, 1/1/21 & $(1,467,500) & $(523,000) & 523,000 & & & $(1,467,500) \\ \hline Net income & (482,000) & (197,000) & & & & (482,000) \\ \hline Dividends declared & 260,000 & 65,000 & & 52,000 & 13,000 & 260,000 \\ \hline Retained earnings, 12/31/21 & $(1,689,500) & $(655,000) & & & & $(1,689,500) \\ \hline Current assets & $1,018,140 & $685,650 & & & 2 & $1,703,790 \\ \hline Investment in Sierra & 855,360 & 0 & 52,000 & 1,095,280 & & 2 \\ \hline Land & 339,000 & 68,200 & 200,000 & & & 607,200 \\ \hline Buildings and equipment (net) & 956,000 & 337,400 & (23,000) & (2,300) & & 1,272,700 \\ \hline Copyright & 0 & 99,750 & 70,000 & 3,500 & & 166,250 \\ \hline Total assets & $3,168,500 & $1,191,000 & . & & & $3,749,940 \\ \hline Accounts payable & $(204,000) & $(171,000) & & & & 375,000 \\ \hline Notes payable & (525,000) & (205,000) & 9,600 & 1,200 & & (721,600)( \\ \hline NCl in Sierra 1/1 & 2 & & & x & x & \\ \hline NCl in Sierra 12/31 & . & & & & (51,920) & (77,840) \\ \hline Common stock & (300,000) & (100,000) & 100,000 & & & (300,000)( \\ \hline \end{tabular}
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