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Since the date it was acquired by Private Manufacturing, Secret has sold inventory to Private on a regular basis. The amount of such Intercompany sales totaled $64,000 in 20x6 and $78,000 in 20X7, including a 30 percent gross profit. All Inventory transferred in 20x6 had been resold by December 31, 20X6, except Inventory for which Private had paid $15,000 and did not resell until January 20x7. All inventory transferred in 20x7 had been resold at December 31, 20x7. except merchandise for which Private had pald $18,000. At December 31, 20x7, trial balances for private and Secret appeared as follows: Item Cash $ Private Manufacturing Debit Credit $ 39,500 112,500 391,800 1,240,631 984, 121 Secret Corporation Debit Credit 29,800 85,100 348, 9ee 1,231,aee 2,750, eee 2,899,90 195,000 643,00 5e,eee 200,000 513,000 1,835,000 430, wee 85, eee 205,874 40, eee Current Receivables Inventory Investment in Secret Stock Investment in Secret Bonds Investment in Private Bonds Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings, January 1 Sales Other Income Income from Secret Corp. Total $1,210,990 98,eee 200,eee 1,800,000 790,00 3,927,695 3,101,900 134, 121 84,936 $9,555,752 $ 619,00 79,888 1,000,000 4,268 500,000 280,000 468,686 790,000 31,00 $9,555,752 $3,771,874 $3,771,874 As of December 31, 20X7, Secret had declared but not yet pald its fourth-quarter dividend of $10,000. Both Private and Secret use the effective interest method for the amortization of bond discount and premium. On December 31, 20x7, Private's management reviewed the amount attributed to goodwill as a result of its purchase of Secret common stock and concluded that an Impalrment loss in the amount of $25,000 had occurred during 20x7 and should be shared proportionately between the controlling and noncontrolling Interests. Private uses the fully adjusted equity method to account for its Investment in Secret. Required: a. Compute the amount of the goodwill as of January 1, 20x7. Goodwill at acquisition b. Compute the balance of Private's Investment in Secret Stock account as of January 1, 2007. (Do not round your Intermediate calculations. Round your final answer to nearest whole dollar.) Balance in Investment c. Compute the gain or loss on the constructive retirement of Secret's bonds that should appear in the 20x7 consolidated income statement. (Do not round your Intermediate calculations. Round your final answer to nearest whole dollar.) on constructive retirement d. Compute the income that should be assigned to the noncontrolling interest in the 20x7 consolidated income statement. (Do not round your Intermedlate calculations. Round your final answer to nearest whole dollar.) Income to noncontrolling interest e. Compute the total noncontroiling interest as of December 31, 20X6. (Do not round your Intermediate calculations. Round your final answer to nearest whole dollar.) Total noncontrolling interest F. Consolidation Worksheet Entries Consolidation Worksheet Entries E 1 > A B C D E F G H I J > Record the reversal of last year's deferral. . Record the basic consolidation entry. Note: Enter debits before credits Note: Enter debits before credits Event Accounts Debit Credit Event Accounts Debit Credit 4 1 View transaction list > Consolidation Worksheet Entries Record the amortized excess value differential entry. Record the deferral of the 20x7 unrealized profits on the inventory transfer. Note: Enter debits before credits Event Accounts Debit Credit 2 2 Note: Enter debits before credits Accounts Debit Credit Event 5 Consolidation Worksheet Entries Record the excess value (differential) reclassification entry. Consolidation Worksheet Entries Record the elimination of the intercompany holdings of Private's bonds. Note: Enter debits before credits Event Accounts Debit Credit 3 Notes Enter debits before credits Event Accounts Debit Credit 6 Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20x7. (If no entry is required for a transaction/event, select "No journal entry required in the first account fleld. Do not round your Intermediate calculations. Round your final answers to nearest whole dollar) 1. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20x7. (if no entry required for a transaction event, select "No Journal entry required in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) view transaction list view transaction list Consolidation Worksheet Entries A B C D E F Consolidation Worksheet Entries H 1 J > Record the entry to eliminate the accrued interest on the intercompany bonds. Record the entry to eliminate the intercompany holdings of Secret's bonds. . Notenter debits before credits Note: Enter debit before credit Event Accounts Debit Credit 7 Event Accounts Debit Credit 1. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20x7. (if no entry is la required for a transaction/event, select "No journal entry required" In the first account field. Do not round your Intermediate calculations. Round your final answers to nearest whole dollar) 1. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20x7. (If n required for a transaction event, select "No journal entry required in the first account field. Do not round your intermec calculations. Round your final answers to nearest whole dollar.) view transactionist View transaction list Consolidation Worksheet Entries G G H 1 J > Consolidation Worksheet Entries A D E F A 1 J J Record the entry to eliminate the intercompany interest receivables/payables /. > Record the entry to eliminate the intercompany dividend payable/receivable. Notat es before credits Event Accounts Debit Credit 8 Note: Enter debits before credite Event Accounts Debit Credit 10 9. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20x7. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Consolidated PRIVATE MANUFACTURING COMPANY AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X7 Consolidation Entries Private Co. Secret Corp. DR CR Income Statement Sales Other Income Less: COGS Less: Depr. & Amort. Expense Less: Other Expenses Goodwill Impairment Loss Gain on Bond Retirement Income from Secret Corp. Consolidated Net Income NCI in Ned Income Controlling Interest in NI Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Assets Cash Current Receivables Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Secret Stock Investment in Secret Bonds Investment in Private Bonds Goodwill Total Assets Liabilities & Equity Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings NCI in NA of Secret Corp. Total Liabilities & Equity