Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2015, for $790,560 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $988,200 although Sierra's book value was only $662,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Fair Value $ 61,000 $ 296,000 Land Buildings and equipment (10-year remaining life) Copyright (20-year life) Notes payable (due in 8 years) 284,000 103,000 (184,000) 246,000 221,000 (172,800) 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, 2015, for both companies. Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Padre Sierra $(1,561,700) $ (614,050) 771,000 440,000 310,000 17,800 0 5,150 48,900 6,100 (113,200) 0 $ (545,000) $ (145,000) Net income Retained earnings, 1/1/15 Net income (above) Dividends declared Retained earnings, 12/31/15 $(1,447,500) (545,000) 260,000 $ (502,000) (145,000) 65,000 $(1,732,500) $ (582,000) Current assets Investment in Sierra Land Buildings and equipment (net) Copyright $ 1,207,740 851,760 311,000 904,000 0 $ 698,950 0 61,000 266,200 97,850 Total assets $ 3,274,500 $ 1,124,000 Accounts payable $ (283,000) $ (198,000) Retained earnings, 1/1/15 Net income (above) Dividends declared $(1,447,500) (545,000) 260,000 $ (502,000) (145,000) 65,000 Retained earnings, 12/31/15 $(1,732,500) $ (582,000) Current assets Investment in Sierra Land Buildings and equipment (net) Copyright $ 1,207,740 851,760 311,000 904,000 0 $ 698,950 0 61,000 266,200 97,850 Total assets $ 3,274,500 $ 1,124,000 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) $ (283,000) (509,000) (300,000) (450,000) (1,732,500) $ (198,000) (184,000) (100,000) (60,000) (582,000) Total liabilities and equities $(3,274,500) $(1,124,000) At year-end, there were no intra-ent receivables or payables. Using the acquisition method, prepare the worksheet to consolidate these two companies. PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2015 Consolidation Entries Accounts Padre Sierra Debit Credit Noncontrolling Interest Consolidated Totals (2,175,750) Revenues Cost of goods sold (1,561,700) 771.000 (614,050) 440.000 At year-end, there were no intra-entity receivables or payables. Using the acquisition method, prepare the worksheet to consolidate these two companies. PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2015 Consolidation Entries Accounts Padre Sierra Debit Credit Noncontrolling Interest Consolidated Totals (2,175,750) (1,561,700) 771,000 310,000 0 (614,050) 440,000 17,800 5,150 6,100 0 (145,000) 48.900 (113,200) (545,000) (2,175,750) (2,175,750) Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Separate company net income Consolidated net income NCI in consolidated net income Controlling interest in CNI 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 (502,000) (145,000) 65,000 (582,000) 698,950 0 (1,447,500) (545,000) 260,000 (1,732,500) 1,207,740 851,760 311,000 904,000 0 3,274,500 (283,000) 1500 ) 61,000 266,200 97,850 1,124,000 (198,000) 1191 nn) Moto Doble Consolidated net income (2,175,750) (2,175,750) NCI in consolidated net income Controlling interest in CNI Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Current assets Investment in Sierra (502,000) (145,000) 65,000 (582,000) 698,950 0 (1,447,500) (545,000) 260,000 (1,732,500) 1,207,740 851,760 311,000 904,000 0 3,274,500 (283,000) (509,000) Land 61,000 266,200 97,850 1,124,000 (198,000) (184,000) Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 0 0 Common stock Additional paid-in capital Retained earnings 12/31 (above) Total liabilities and stockholders' equity (300,000) (450,000) (1,732,500) 3,274,500 (100,000) (60,000) (582,000) 1,124,000 0