Prepare a word-processed report that describes and discusses the following worksheet results: (200-300 words) + references if any. a. the effects of alternative investment accounting methods on the parent's trial balances and the final consolidation figures. b. The relation between consolidated retained earnings and the parent's retained earnings under each of the three (equity, initial value, partial equity) investment accounting methods. c. The effect on EPS, return on assets, return on equity, and debt-to-equity ratios of the recognition that all acquisition-related goodwill is considered inpaired in 2013. Thanks

Chapter 3 - Computer Project PECOS COMPANY AND SUARO COMPANY Consolidated Information Worksheet Revenues Operating expenses Amortization of intangibles Goodwill impairment loss Income of Suaro Net income Retained earningsPecos, 1/1 Retained earningsSuaro, 1/1 Net income (above) Dividends paid Retained earnings, 12/31 Cash Receivables Inventory Investment in Suaro Land Equipment (net) Software Other intangibles Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity Pecos -1,052,000 821,000 Suaro -427,000 262,000 0 0 0 -165,000 0 0 200,000 -201,000 -165,000 35,000 -331,000 195,000 247,000 415,000 95,000 143,000 197,000 0 85,000 100,000 312,000 0 0 932,000 341,000 240,100 0 145000 0 -1,537,100 -500,000 -251,000 -350,000 -331,000 -932,000 Fair Value Allocation Schedule Acquisition-date fair value 1,450,000 Book value 476,000 Excess fair value over book value 974,000 Land Brand Name Software IPR&D Goodwill Total Amortizations and Write-off 2011 2012 -10,000 0 0 60,000 0 0 100,000 50,000 50,000 300,000 300,000 0 524,000 0 0 974,000 350,000 50,000 Suaro's Retained Earnings Changes 2011 2012 Income 75,000 165,000 Dividends 0 35,000 PECOS COMPANY AND SUARO COMPANY Consolidated Worksheet For the Year Ended December 31, 2012 EQUITY METHOD Revenues Operating expenses Amortization of intangibles Goodwill impairment loss Income of Suaro Net income Retained earningsPecos, 1/1 Retained earningsSuaro, 1/1 Net income (above) Dividends paid Retained earnings, 12/31 Cash Receivables Inventory Investment in Suaro Pecos -1,052,000 821,000 -115,000 -346,000 Suaro -427,000 262,000 0 (E) 0 0 (I) -165,000 -655,000 0 -346,000 200,000 -801,000 0 -201,000 (S) -165,000 35,000 -331,000 195,000 247,000 415,000 1,255,000 95,000 143,000 197,000 0 (D) 341,000 240,100 0 145,000 0 0 2,838,100 85,000 100,000 312,000 (A) 0 0 (A) 0 (A) 932,000 -1,537,100 -500,000 -801,000 -2,838,100 -251,000 -350,000 (S) -331,000 -932,000 Consolidation Entries Debit Credit 50,000 115,000 201,000 (D) 35,000 35,000 (S) (A) (I) 551,000 624,000 115,000 (A) 10,000 (E) 50,000 Consolidated Totals -1,479,000 1,083,000 50000 0 0 -346,000 -655,000 0 -346,000 200,000 -801,000 290,000 390,000 612,000 0 Consolidated Worksheet (continued) Land Equipment (net) Software Other intangibles Brand name Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity Shaded items were provided on the Consolidated Information Worksheet 50,000 60,000 524,000 350,000 1,385,000 1,385,000 416,000 340,100 312,000 145,000 60,000 524,000 3,089,100 -1,788,100 -500,000 -801,000 -3,089,100 PECOS COMPANY AND SUARO COMPANY Consolidated Worksheet For the Year Ended December 31, 2012 INITIAL VALUE METHOD Revenues Operating expenses Amortization of intangibles Goodwill impairment loss Income of Suaro Net income Retained earningsPecos, 1/1 Retained earningsSuaro, 1/1 Net income (above) Dividends paid Retained earnings, 12/31 Cash Receivables Inventory Investment in Suaro Pecos -1,052,000 821,000 -35,000 -266,000 Suaro -427,000 262,000 0 (E) 0 0 (I) -165,000 -930,000 0 -266,000 200,000 -996,000 (*C) -201,000 (S) -165,000 35,000 -331,000 195,000 247,000 415,000 1,450,000 95,000 143,000 197,000 0 (D) Consolidation Entries Debit Credit 50,000 35,000 275,000 201,000 (I) 35,000 (S) 35,000 (A) (*C) 551,000 624,000 275,000 (A) 10,000 (E) 50,000 Consolidated Totals -1,479,000 1,083,000 50,000 0 0 -346,000 -655,000 0 -346,000 200,000 -801,000 290,000 390,000 612,000 0 Consolidated Worksheet (continued) Land Equipment (net) Software Other intangibles Brand name Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity 341,000 240,100 0 145,000 0 0 3,033,100 85,000 100,000 312,000 (A) 0 0 (A) 0 (A) 932,000 -1,537,100 -500,000 -996,000 -3,033,100 -251,000 -350,000 (S) -331,000 -932,000 Shaded items were provided on the Consolidated Information Worksheet 50,000 60,000 524,000 350,000 1,545,000 1,545,000 416,000 340,100 312,000 145,000 60,000 524,000 3,089,100 -1,788,100 -500,000 -801,000 -3,089,100 PECOS COMPANY AND SUARO COMPANY Consolidated Worksheet For the Year Ended December 31, 2012 PARTIAL EQUITY METHOD Revenues Operating expenses Amortization of intangibles Goodwill impairment loss Income of Suaro Net income Retained earningsPecos, 1/1 Retained earningsSuaro, 1/1 Net income (above) Dividends paid Retained earnings, 12/31 Cash Receivables Inventory Investment in Suaro Pecos -1,052,000 821,000 0 0 -165,000 -396,000 Suaro -427,000 262,000 0 (E) 0 0 (I) -165,000 -1,005,000 0 -396,000 200,000 -1,201,000 0 (*C) -201,000 (S) -165,000 35,000 -331,000 195,000 247,000 415,000 1,655,000 95,000 143,000 197,000 0 (D) 341,000 240,100 0 145,000 0 0 3,238,100 85,000 100,000 312,000 (A) 0 0 (A) 0 (A) 932,000 -1,537,100 -500,000 -1,201,000 -3,238,100 -251,000 -350,000 (S) -331,000 -932,000 Consolidation Entries Debit Credit 50,000 165,000 350,000 201,000 (I) 35,000 35,000 (S) (I) (*C) 551,000 165,000 350,000 (A) 10,000 Consolidated Totals -1,479,000 1,083,000 50,000 0 0 -346,000 -655,000 0 -346,000 200,000 -801,000 290,000 390,000 612,000 0 Consolidated Worksheet (continued) Land Equipment (net) Software Other intangibles Brand name Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity Shaded items were provided on the Consolidated Information Worksheet (E) 50,000 50,000 60,000 524,000 -1,788,100 -500,000 -801,000 -3,089,100 350,000 1,785,000 416,000 340,100 312,000 145,000 60,000 524,000 3,089,100 1,785,000 PECOS COMPANY AND SUARO COMPANY Goodwill Impairment Loss Effects Common shares outstanding Consolidated net income/(loss) Consolidated assets, 1/1/12 Consolidated assets, 12/31/12 Consolidated equity, 1/1/12 Consolidated equity, 12/31/12 Consolidated liabilities Earnings-per-share Return on assets Return on equity Debt-to-equity Without Impairment 500,000 346,000 2,943,100 3,089,100 1,155,000 1,301,000 1,788,100 0.69 11.47% 28.18% 1.37 With Impairment 500,000 -178,000 2,943,100 2,565,100 1,155,000 777,000 1,788,100 -0.36 -6.46% -18.43% 2.3 PECOS COMPANY AND SUARO COMPANY Consolidated Worksheet For the Year Ended December 31, 2012 EQUITY METHOD - GOODWILL IMPAIRMENT LOSS Revenues Operating expenses Amortization of intangibles Goodwill impairment loss Income of Suaro Net income Retained earningsPecos, 1/1 Retained earningsSuaro, 1/1 Net income (above) Dividends paid Retained earnings, 12/31 Cash Receivables Inventory Investment in Suaro Pecos -1,052,000 821,000 0 524,000 -115,000 178,000 Suaro -427,000 262,000 0 (E) 0 0 (I) -165,000 -655,000 0 178,000 200,000 -277,000 0 -201,000 (S) -165,000 35,000 -331,000 195,000 247,000 415,000 731,000 95,000 143,000 197,000 0 (D) 341,000 240,100 0 145,000 0 0 2,314,100 85,000 100,000 312,000 0 0 (A) 0 932,000 -1,537,100 -500,000 -277,000 -2,314,100 -251,000 -350,000 (S) -331,000 -932,000 Consolidation Entries Debit Credit 50,000 115,000 201,000 (D) 35,000 35,000 (A) (I) (A) 551,000 115,000 100,000 (A) 10,000 (E) 50,000 Consolidated Totals -1,479,000 1,083,000 50,000 524,000 0 178,000 -655,000 0 178,000 200,000 -277,000 290,000 390,000 612,000 0 Consolidated Worksheet (continued) Land Equipment (net) Software Other intangibles Brand name Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity Shaded items were provided on the Consolidated Information Worksheet 50,000 60,000 350,000 861,000 861,000 416,000 340,100 312,000 145,000 60,000 0 2,565,100 -1,788,100 -500,000 -277,000 -2,565,100