Patriot Corporation has acquired 80 % of Sundown's company stock for 700.000 on January 1. 2018. when Subsidiary cquity consists of 450.000 capital stock and S200,000 retained carnings . Subsidiary had net income of 200.000 and had dividends of S60,000 which was recorded as payable by the subsidiary . In time of acquisition a building was undervalued by S150,000 . the building has a useful life of 10 years . Any difference between book and fair value above the 150,000 will be assigned to goodwill . Using Equity Method 1) Calculate the amount of goodwill raised from the business combination . (Marks) 2 ) Record the parent entries for the following : a acquisition of the subsidiary on January 1, 2018 b. recording the income from subsidiary c. recording the dividends from subsidiary (8.32 Marks) 3Record the elimination entries required for consolidation on December 31,2018 (23.68 Marks )

Question 3 (40 marks) Patriot Corporation has acquired 80% of Sundown's company stock for $700.000 on January 1, 2018, when Subsidiary equity consists of $450.000 capital stock and S200.000 retained earnings. Subsidiary had net income of 200,000 and had dividends of $60.000 which was recorded as payable by the subsidiary. In time of acquisition a building was undervalued by $150,000, the building has a useful life of 10 years. Any difference between book and fair value above the 150,000 will be assigned to goodwill. Using Equity Method 1) Calculate the amount of goodwill raised from the business combination. (8 Marks) 2) Record the parent entries for the following: a. acquisition of the subsidiary on January 1, 2018 b. recording the income from subsidiary c. recording the dividends from subsidiary (8.32 Marks) 3) Record the elimination entries required for consolidation on December 31,2018 (23.68 Marks)