Parent company's journal entries in the accounting for its investment in a subsidiary under the fully-adjusted equity method and the preparing of a consolidated worksheet, all in the second year after the acquisition of the subsidiary Given: Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. The fair value of the noncontrolling interest was $43,250. As of January 1, 20X7, the acquisition date: 1) The book value of Sheet's net assets was $150,000, while the fair value of the identifiable net assets was $191,250, 2) The difference related to the fair value of Sheet's building & equipment exceeding the book value by $41,250 3) Sheet's buildings & equipment have an estimated life of 11 years 4) Accumulated depreciation on Sheet's buildings and equipment as of the acquisition date was $60,000 5) Goodwill as of the acquisition date was $25,000. At December 31, 20X8. Pillow's management reviewed the amount attributed to goodwill and concluded that the goodwill was impaired and should be reduced to $14,000. For stand-alone legal entity reporting, Pillow used the fully-adjusted equity method in accounting for its investment in Sheet. The balance on Pillow's books for the investment in Sheet as of January 1, 20X8 was $202,000, Sheet's reported net income for 20X8 was $45,000. In addition, Sheet's declared and paid dividends totaling $25,000. Detail analysis of receivables and payables showed that Pillow owed Sheet $9,000 on December 31, 20X8. General Ledger Account Debit Entry No. 1 Credit Record Pillow's 80% share of Sheet's 20X8 net income. General Ledger Account Debit Credit Entry No. 2 Record Pillow's 80% share of Sheet's 20X8 dividend. General Ledger Account Debit Entry No. 3 Credit Record the impact of the goodwill impairment and the depreciation adjustment for the excess acquisition price. Parent company's journal entries in the accounting for its investment in a subsidiary under the fully-adjusted equity method and the preparing of a consolidated worksheet, all in the second year after the acquisition of the subsidiary Given: Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. The fair value of the noncontrolling interest was $43,250. As of January 1, 20X7, the acquisition date: 1) The book value of Sheet's net assets was $150,000, while the fair value of the identifiable net assets was $191,250, 2) The difference related to the fair value of Sheet's building & equipment exceeding the book value by $41,250 3) Sheet's buildings & equipment have an estimated life of 11 years 4) Accumulated depreciation on Sheet's buildings and equipment as of the acquisition date was $60,000 5) Goodwill as of the acquisition date was $25,000. At December 31, 20X8. Pillow's management reviewed the amount attributed to goodwill and concluded that the goodwill was impaired and should be reduced to $14,000. For stand-alone legal entity reporting, Pillow used the fully-adjusted equity method in accounting for its investment in Sheet. The balance on Pillow's books for the investment in Sheet as of January 1, 20X8 was $202,000, Sheet's reported net income for 20X8 was $45,000. In addition, Sheet's declared and paid dividends totaling $25,000. Detail analysis of receivables and payables showed that Pillow owed Sheet $9,000 on December 31, 20X8. General Ledger Account Debit Entry No. 1 Credit Record Pillow's 80% share of Sheet's 20X8 net income. General Ledger Account Debit Credit Entry No. 2 Record Pillow's 80% share of Sheet's 20X8 dividend. General Ledger Account Debit Entry No. 3 Credit Record the impact of the goodwill impairment and the depreciation adjustment for the excess acquisition price