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67. Comprehensive consolidation subsequent to date of acquisition-Equity method, noncontrolling interest, AAP computation, bargain purchase gain, downstream intercompany inventory profits, upstream intercompany depreciable asset gain A parent company acquired 70% of the stock of a subsidiary company on January 1, 2020, for $512,400. On this date, the balances of the subsidiary's stockholders' equity accounts were Common Stock, $420,000, and Retained Earnings, $84,000. On January 1, 2020, the fair value of the 30% noncontrolling interest was $226,800. An examination of the subsidiary's assets and liabilities on January 1, 2020 revealed that book values were equal to fair values for all items except two: (1) inventories, which had a book value of $100,800 and a fair value of $142,800, and (2) intangible assets which had a fair value of $252,000 and a book value of zero. Both companies use the FIFO inventory method and sell all of their inventories at least once per year. The intangible assets had a useful life of 10 years. On January 1, 2021, the subsidiary sold a building to the parent for $420,000. On this date, the building was carried on the subsidiary's books (net of accumulated depreciation) at $336,000. Both companies estimated that the building has a remaining life of 10 years on the intercompany sale date, with no salvage value. The parent regularly sells merchandise to the subsidiary with a profit margin of 35 percent of selling price. During 2022, intercompany sales amount to $168,000, of which $50,400 of merchandise remains in the ending inventory of the subsidiary on December 31, 2022. On December 31, 2022, $42,000 of these intercompany sales remained unpaid. Additionally, during 2021, intercompany sales amount to $126,000, of which $33,600 of merchandise remained in the ending inventory of the subsidiary on December 31 , 2021. On December 31, 2021, $47,040 of these intercompany sales remained unpaid. The parent accounts for its Equity Investment in the subsidiary using the equity method. Unconfirmed profits are allocated pro-rata. The pre-consolidation financial statements for the two companies for the year ended December 31, 2022, are provided below: Requirement: Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet. 67. Comprehensive consolidation subsequent to date of acquisition-Equity method, noncontrolling interest, AAP computation, bargain purchase gain, downstream intercompany inventory profits, upstream intercompany depreciable asset gain A parent company acquired 70% of the stock of a subsidiary company on January 1, 2020, for $512,400. On this date, the balances of the subsidiary's stockholders' equity accounts were Common Stock, $420,000, and Retained Earnings, $84,000. On January 1, 2020, the fair value of the 30% noncontrolling interest was $226,800. An examination of the subsidiary's assets and liabilities on January 1, 2020 revealed that book values were equal to fair values for all items except two: (1) inventories, which had a book value of $100,800 and a fair value of $142,800, and (2) intangible assets which had a fair value of $252,000 and a book value of zero. Both companies use the FIFO inventory method and sell all of their inventories at least once per year. The intangible assets had a useful life of 10 years. On January 1, 2021, the subsidiary sold a building to the parent for $420,000. On this date, the building was carried on the subsidiary's books (net of accumulated depreciation) at $336,000. Both companies estimated that the building has a remaining life of 10 years on the intercompany sale date, with no salvage value. The parent regularly sells merchandise to the subsidiary with a profit margin of 35 percent of selling price. During 2022, intercompany sales amount to $168,000, of which $50,400 of merchandise remains in the ending inventory of the subsidiary on December 31, 2022. On December 31, 2022, $42,000 of these intercompany sales remained unpaid. Additionally, during 2021, intercompany sales amount to $126,000, of which $33,600 of merchandise remained in the ending inventory of the subsidiary on December 31 , 2021. On December 31, 2021, $47,040 of these intercompany sales remained unpaid. The parent accounts for its Equity Investment in the subsidiary using the equity method. Unconfirmed profits are allocated pro-rata. The pre-consolidation financial statements for the two companies for the year ended December 31, 2022, are provided below: Requirement: Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet
