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: Book Value Fair Value $ 310,200 Land $ 60,200 293,000 198,000 Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years 242,000 282,000 (188,000) (204,000) 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. 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 $(1,461,980) 739,000 345,000 $ (669,550) 420,000 10,500 9,900 6,150 Revenues Cost of goods sold Depreciation expense Amortization expense 0 Interest expense 49,500 Equity in income of Sierra (177,520) 0 (506,000) $ (223,000) Net income Retained earnings, 1/1/18 $ (1,315,000) (506,000) 260,000 $ (1,561,000) $ (514,000) (223,000) 65,000 Net income Dividends declared (672,000) Retained earnings, 12/31/18 Current assets 885,080 903,920 $ 695,200 Investment in Sierra Land 60,200 322,000 Buildings and equipment (net) copyright 975,000 282,500 188,100 $ 1,226,000 0 $3,086,000 Total assets Accounts payable Notes payable (260,000) (515,000) (300,000) (450,000) (1,561,000) (190,000) (204,000) (100,000) (60,000) (672,000) Common stock Additional paid-in capital Retained earnings (above) $(3,086,000) Total liabilities and equitiess (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 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 Totals Sierra Credit Accounts Padre Debit $(1,461,980) (669,550) Revenues Cost of goods sold 739.000 420,000 Depreciation expense 345,000 10,500 Amortization expense 0 9,900 Interest expense 49,500 6,150 Equity in income of Sierra (177,520) 0 (506,000) (223,000) Separate company net income Consolidated net income NI to noncontrolling interest NI to Padre Company $(1,315,000) $ (514,000) Retained earnings 1/1 Net income (above) (506,000) (223,000) 65,000 Dividends declared 260,000 (1,561,000) (672,000) Retained earnings 12/31 Current assets $ 885,080 695,200 Investment in Sierra 903.920 Land 322,000 60,200 Buildings and equipment (net) 975,000 282,500 Copyright 188,100 1,226,000 3,086,000 Total assets Accounts payable (260,000) (190,000) Notes payable (204,000) (515,000) $ 3,086,000 $ 1,226,000 Total assets Accounts payable $ (260,000) $ (190,000) Notes payable (515,000) (204,000) NCI in Sierra 1/1 NCI in Sierra 12/31 (300,000) Common stock (100,000) Additional paid-in capital (450,000) (60,000) Retained earnings 12/31 (above) (1,561,000) (3,086,000) $(1,226,000) (672,000) Total liabilities and stockholders' equity