Paramount Motion Pictures company acquired 90% of the stock of a Warner Bros. on January 1, 2015, for $213,300 cash.

On this date, the balances of the Warner Bros.'s stockholders' equity accounts were:

Common Stock $20,000

Additional Paid-In Capital$100,000

Retained Earnings, $24,000.

On January 1, 2015, the market value for the 10% of shares not purchased by the Paramount Motion Pictures was $23,700.

On January 1, 2015, the Warner Bros.'s recorded book values were equal to fair values for all items

except four:

(1) accounts receivable had a book value of $46,000 and a fair value of $42,000,

(2) buildings and equipment, net had a book value of $68,000 and a fair value of $86,000,

(3) the licenses intangible asset had a book value of $42,000 and a fair value of $67,000, and

(4) notes payable had a book value of $56,000 and a fair value of $50,000.

Both companies use the FIFO inventory method and sell all of their inventories at least once per year. The net balance of accounts receivables are collected in the following year.

On the acquisition date, the Warner Bros.'s buildings and equipment, net had a remaining useful life of

7 years, licenses had a remaining useful life of 10 years, and notes payable had a remaining term of 4 years.

On January 1, 2018, the Paramount Motion Pictures sold a building to the Warner Bros. for $180,000. On this date, the

building was carried on the Paramount Motion Pictures's books (net of accumulated depreciation) at $165,000. Both companies estimated that the building has a remaining life of 6 years on the intercompany sale date, with no salvage value.

Each company routinely sells merchandise to the other company, with a profit margin of 25 percent of selling price (regardless of the direction of the sale).

During 2019, intercompany sales amount to $215,000, of which $8,000 of merchandise remains in the ending inventory of the parent. On December 31, 2019, $44,000 of these intercompany sales remained unpaid. Additionally, the Warner Bros.'s December 31, 2018 inventory includes $112,000 of merchandise purchased in the preceding year from Paramount Motion Pictures.

During 2018, intercompany sales amount to $300,000, and on December 31, 2018, $80,000 of these intercompany sales remained unpaid.

Worth uup to 10 points. Prepare the consolidation workpapers for the consolidated balance sheet Show all relevant calculations and elimination entries.Required: Carefully Follow and label each step. DO ALL WORK ON THE SPREADSHEET TAB 1. Prepare the acquisition analysis as of acquisition date. Compute the unamortized acquisition differential as of 1/1/2019 and the related amortization for 2019. 2. Analyze each intercompany transaction. Label as either upstream downstream. Calculate income and balance sheet impacts 3. Calculate Net income to the controlling interest for the year 2019 4. Verify the calculation of the balance in the acccount equity in sub earnings and record the parent company entries with respect to its investment during 2019 5. Prepare all elimination and consolidation entries for 2019 6. Complete the consolidating spreadsheet for the year ended December 31, 2019. (do not any letter codes on the spreadsheet; post all amounts from (5) above. Use appropriate formulas to combine amounts from (5) above to consolidated spreadsheet. DO NOT ENTER ANY AMOUNTS in OR change any formulas in cells THAT ARE HIGHLIGHTEDINCOME STATEMENT P S ELIMINATIONS CONS.TOT. FYE 12/31/19 DEBIT CREDIT Jan 1 2015 Sales 700,000 500,000 1,200,000 1) Acquistion Price: 213,300 Equity in sub earnings 205,936 205,936 NCI 23,700 Total FV OF SUB 237,000 Total revenues 905,936 500,000 1,405,936 Book Value Net Assets (144,000) Excess Of Cost 93,000 Cost of goods sold 360,000 228,000 588,000 AR (4,000) Depr & Amort 12,000 10,000 22,000 Building/Equipment (18,000) Interest expense 10,000 6,000 16,000 Intangible (25,000) Other expenses 175,000 54,000 229,000 Notes Payable (6,000) Total expenses 557,000 298,000 855,000 GoodWill: 40,000 Total Net income 348,936 202,000 550,936 Less net income to NCI Unamoritzed: Net income to controlling interest 348,936 202,000 550,936 Building and Equipme 7,714 Intangible 15,000 RETAINED EARNINGS STATEMENT Amortization: Buiding and equipmer 2,571 Retained Earnings 1/1 175,743 129,000 304,743 Intagible 2,500 Net income 348,936 202,000 550,936 Amortization 2015 Amortization 2016 Amortization 2017 Amortization 2018 Una Less: Dividends declared 30,000 15,000 45,000 0 0 (4,000) Retained Earnings 12/31 494,679 316,000 810,679 BALANCE SHEET Cash 45,000 25,000 70,000 Accounts receivable 54,000 48,000 102,000 Inventories 130,000 46,000 176,000 Buildings and equipment, net 126,000 190.000 316,000 Other assets 57,000 100.000 157,000 Licenses 90.000 90,000 2) Interco Transaction Investment in S 439,679 439,679 2018 Down Stream: 180,000 SP goodwill O Building Gain 15,000 165,000 Cost Remainig Life 6 years Amortization 2,500 Downstream Sale Of 28,000RETAINED EARNINGS STATEMENT Amortization: Buiding and equipmer 2,571 Retained Earnings 1/1 175,743 129,000 304,743 Intagible 2,500 Net income 348,936 202,000 550,936 Amortization 2015 Amortization 2016 Amortization 2017 Amortization 2018 Una Less: Dividends declared 30,000 15,000 45,000 0 0 (4,000) Retained Earnings 12/31 494,679 316,000 810,679 BALANCE SHEET Cash 45,000 25,000 70,000 Accounts receivable 54,000 48,000 102,000 Inventories 130,000 46,000 176,000 Buildings and equipment, net 126,000 190,000 316,000 Other assets 57,000 100,000 157,000 Licenses 90,000 90,000 2) Interco Transaction Investment in S 439,679 439,679 2018 Down Stream: 180,000 SP goodwill Building Gain 15,000 165,000 Cost Remainig Life 6 years Amortization 2,500 O Downstream Sale Of 28,000 Total assets 851,679 499,000 1,350,679 Accounts payable 35,000 15,000 50,000 2019 Upstream 215,000 SP Notes payable 50,000 22,000 72,000 8,000 remaining ending inveto Other liabilities 22,000 26,000 48,000 2,000 GP Common stock 50,000 20.000 70,000 Additional paid-in capital 200.000 100,000 300,000 Retained earnings 494,679 316,000 810,679 noncontrolling interest Total liabilities and equity 851,679 499,000 0 0 1,350,679 0 0 0 0