Paul Company acquires all of the voting stock of Simon Co. on January 1, 2018 at an acquisition cost of $20,300,000 in cash.Simon's balance sheet at the date of acquisition is as follows:

Problem 3 Consolidation Year 1 Paul Company acquires all of the voting stock of Simon Co. on January 1, 2018 at an acquisition cost of $20,300,000 in cash. Simon's balance sheet at the date of acquisition is as follows: Book fin thousands) Value Fair Value Dr (Cr) Dr (Cr) Cash 100,000 100,000 Accounts Receivable 200,000 200,000 Inventory 100,000 100,000 Plant & equipment 5,000,000 7,000,000 Accumulated Depreciation (1,000,000) Patents 0 5,000,000 Current liabilities 300,000) (300,000) Long-term liabilities (1,400,000) (1,500,000) Common stock (2,500,000) Retained earnings (1,200,000) Total As of January 1, 2018, the revaluations have the following estimated lives (all straight-line): Plant & equipment 20 years Patents . 10 years Goodwill Impairment in 2018: $500,000 Long-term liabilities 5 years Paul uses the equity method to account for its investment in Simon on its own books. The December 31, 2018 trial balances for Paul and Simon appear in the consolidation working paper provided on the next page. You do not have to fill it in. a Prepare a schedule showing the calculation of Goodwill at acquisition date (January 1, 2018). b. Present consolidation eliminating entries to consolidate the December 31, 2018 financial statements of the parent and subsidiary.You do not have to ll this in. 2018 Consolidation Entries (in Simon thousands] Paul Co. Co. DR CR Consolidated Income Statement Sales 25,000 10,000 less: COGS (15,000) (6,000) less: Depreciation Expense [5,000] [750) less: Other Expenses [2,000] (1,750) Income from Simon Co. 420 Net Income 3,420 1,500 Statement of Retained Earnings Beginning Balance 70,000 1,200 Net Income 3,420 1,500 less: Dividends Declared (800) [100) Ending Balance 72,620 2,600 Balance Sheet Cash 2,000 125 Accounts Receivable 1,000 225 Inventory 1,200 150 Investment in Simon Co. 20,620 Patent Goodwill Buildings 8: Equipment 180,000 9,150 less: Accumulated Depreciation (20,000) (1,750) Total Assets 184,820 7,900 Current Liabilities 11,300 500 longterm Liabilities 56,900 2,300 Common Stock 44,000 2,500 Retained Earnings 72,620 2,600 Total liabilities 8: Equity 184,820 7,900