Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $754,080 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $942,600 although Sierra's book value was only $659,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Land Buildings and equipment (18-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Book Value $ 63,000 355,000 137,000 (155, 000) Fair Value $ 297,000 311,000 217,000 (141,400) 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. Padre $(1,427,540) 752,000 292,000 Sierra $ (657,900) 413,000 11,500 6,85 6,550 Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/21 Net income Dividends declared $ (220,000) $ (499,000) (220,000) 43,500 (174,960) $ (515,000) $(1,362,500) (515,000) 260,000 $(1,617,500) $ 941,460 877,040 308,000 924,000 65,000 $ (654,000) $ 650, 350 63,000 343,500 130,150 Retained earnings, 12/31/21 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 $ 1,187,000 $ 3,050,500 $ (218,000) (465, 000) (300,000) (450,000) (1,617,500) $ (3,050, 500) $ (218,000) (155,000 (100,000 (60,000 (654,000) $(1,187,000) PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Padre Sierra Debit Credit Noncontrolling Interest Consolidated Totals Revenues $ (657,900) $ (2,085,440) S (1,427,540) 752,000 413,000 1,165,000 299, 100 292,000 11,500 4,400 0 6,850 4,000 10,850 43,500 6,550 1,700 51,750 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 0 174,960 0 (174,960) $ (515,000) $ (220,000) (43,740) (48,740) Ni to Padre Company $ (515,000) $ (499,000) 499,000 Retained earnings, 1/1/21 Net income Dividends declared S (1,362,500) (515,000) (220,000) 65,000 Retained earnings, 12/31/21 260,000 S (1,617,500) $ 941,460 $ (654,000) $ 650,350 Current assets Investment in Sierra 877,040 0 Land 308,000 63,000 924,000 343,500 Buildings and equipment (net) Copyright 0 Total assets $ 3,050,500 $ (218,000) (465,000) 130,150 $ 1,187,000 $ (218,000) (155,000) $ (43,740) Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities (300,000) (100,000) (450,000) (60,000) (1,617,500) $ (3.050.500) (654,000) S |(1,187,000) $ 679,660 S 4,400