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Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2015, for $809,120 cash. At the acquisition date, Sierras

Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2015, for $809,120 cash. At the acquisition date, Sierras total fair value, including the noncontrolling interest, was assessed at $1,011,400 although Sierras book value was only $669,000. Also, several individual items on Sierras financial records had fair values that differed from their book values as follows:

Book Value Fair Value
Land $ 60,900 $ 320,900

Buildings and equipment (10-year remaining life)

330,000 298,000
Copyright (20-year life) 157,000 261,000
Notes payable (due in 8 years) (167,000 ) (156,600 )

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.

Padre Sierra
Revenues $ (1,408,440 ) $ (601,350 )
Cost of goods sold 716,000 422,000
Depreciation expense 282,000 11,000
Amortization expense 0 7,850
Interest expense 51,800 5,500
Equity in income of Sierra (121,360 ) 0
Net income $ (480,000 ) $ (155,000 )
Retained earnings, 1/1/15 $ (1,455,000 ) $ (509,000 )
Net income (above) (480,000 ) (155,000 )
Dividends declared 260,000 65,000
Retained earnings, 12/31/15 $ (1,675,000 ) $ (599,000 )
Current assets $ 1,048,520 $ 585,950
Investment in Sierra 878,480 0
Land 358,000 60,900
Buildings and equipment (net) 920,000 319,000
Copyright 0 149,150
Total assets $ 3,205,000 $ 1,115,000
Accounts payable $ (242,000 ) $ (189,000 )
Notes payable (538,000 ) (167,000 )
Common stock (300,000 ) (100,000 )
Additional paid-in capital (450,000 ) (60,000 )
Retained earnings (above) (1,675,000 ) (599,000 )
Total liabilities and equities $ (3,205,000 ) $ (1,115,000 )
At year-end, there were no intra-entity receivables or payables.
Question Using the acquisition method, prepare the worksheet to consolidate these two companies (please fill out chart)image text in transcribeds.
For Year Ending December 31, 2015 Consolidation Entries Padre Sierre Debit Credit Accounts 216.000 422,000 Cost of goods sold 11.000 282,000 Depreciation expense 0 7850 Amortization expense 51.800 5.500 nterest expense Equity in income of Sierra 480,000) 155.000) separate company net income Consolidated net income CI in consolidated net income Controlling interest in CNI Retained earnings 1/1 (1,455,000) (509,000) Net income (above) 65.000 260,000 Dividends declared E000) 599.000) Retained earnings 12/31 current assets 585,950 1,048,520 878,480 nvestment in Sierra and 358,000 60,900 319.000 920,000 uildings and equipment (net) Copyright 149 150 3.205.000 1.115.000 Total assets Accounts payable Notes payable (538,000) (167.0 NCI in Sierra 1/1 NCI in Sierra 12/31 (300,000) ommon stock dditional paid-in capital Retained earnings 12/31 (above) (1,675,000) (599,000) 1115.000 0 3,205,000 otal liabilities and stockholders' equity Noncontrolling Consolidated Totals

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