Parent Company acquired 100 percent of Subsidiary's outstanding stock for $6,162,500 cash on January

1, 2019. At the date of acquisition, Subsidiary's balance sheet was as follows:

Cash 157,250

Receivables 348,500

Inventory 633,250

Land 382,500

Equipment (net) 956,250

Software 1,338,750

Liabilities (1,793,500)

Common Stock (1,487,500)

Retained Earnings (535,500)

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Certain assets and liabilities had fair values that differed from their book values. The fair values of these were as follows (note: this is not the difference between fair value and book value; this is the fair value):

Land 340,000

Brand Name (indefinite life) 255,000

Software (2 year life) 1,763,750

IP R&D (10 year life) 1,275,000

Other relevant information:

? Parent's 1/1/2020 retained earnings balance (excluding the effect of any 2019 subsidiary

transactions/income) was $3,952,500.

? The subsidiary had net income of $318,750 and paid no dividends in 2019.

? There are no intercompany payables/receivables between Parent and Subsidiary.

? The companies' 12/31/2020 trial balances are as follows:

Revenues (4,471,000) (1,814,750)

Operating Expenses 3,489,250 1,113,500

Income of Subsidiary ? -

Net Income (981,750) (701,250)

Retained Earnings - Parent, 1/1/2020 ? -

Retained Earnings - Subsidiary, 1/1/2020 (854,250)

Net Income (above) ? (701,250)

Dividends Declared 850,000 148,750

Retained Earnings, 12/31/2020 850,000 (1,406,750)

Cash 828,750 403,750

Receivables 1,049,750 607,750

Inventory 1,763,750 837,250

Investment in Subsidiary Co. ? -

Land 1,449,250 361,250

Equipment (net) 1,020,425 425,000

Software - 1,326,000

Other Intangibles 616,250 -

Goodwill

Total Assets 6,728,175 3,961,000

Liabilities (6,532,675) (1,066,750)

Common Stock (2,125,000) (1,487,500)

Retained Earnings (above) ? (1,406,750)

Total Liabilities and Equity (8,657,675) (3,961,000)

Fair Value Allocation Schedule

Price Paid 6,162,500

Book Value (2,023,000)

Excess Initial Value 4,139,500 Amortization

to land (42,500) 2019 2020

to brand name 255,000 - -

to software 425,000 212,500 212,500

to IPR&D 1,275,000 127,500 127,500

to goodwill 2,227,000 340,000 340,000

Subsidiary Retained Earnings Change Income Dividends

2019 318,750 -

2020 701,250 148,750

Required:

Excel workbook to consolidate Parent and Subsidiary's financial statements for 2020. The

workbook should contain the following:

? Tab 1: The information contained on the previous page of these instructions, with the fair value

allocation schedule completed.

? Tab 2: Calculation of the 12/31/2020 balance of the Investment in Subsidiary account (on Parent's

books) using (1) the equity method, (2) the partial equity method, and (3) the initial value method.

Also calculate Parent's 1/1/2020 retained earnings using each of these methods.

? Tab 2: A listing of all consolidation entries necessary under each of the respective methods

(equity, partial equity, and initial value).

? Tab 3: Full Consolidation worksheet using the equity method.

? Tab 4: Full Consolidation worksheet using the partial equity method.

? Tab 5: Full Consolidation worksheet using the initial value method.