Prepare the consolidation entries for 2020 (You are NOT required to prepare the consolidation worksheet nor the financial statements). You may label your entries using the text nomenclature: C, E, A, D, (and I) although this is not a requirement. Show your calculations for all amounts.

Picasso Industries, a large publicly traded US corporation, purchased all of the outstanding stock of Sargent Corporation on January 1, 2016 for $2,520,000. On January 1, 2016 the book value of Sargent's net assets was $800,000. $500,000 of the excess fair value price was attributed to a building with a 20-year remaining life, $420,000 to a technology asset with a 7-year remaining life and a zero book value on Sargent's books, and the balance was allocated to goodwill. Picasso records the investment in Sargent on its books using the equity method. During 2020 an impairment test is undertaken on goodwill. As a result of this test it was determined that the goodwill needed to be (and was) written down by $300,000. This write-down is reflected in the equity income reported by Picasso Industries. Following are the individual company financial statements for the year ended December 31, 2020: Picasso Industries Sargent Corporation Balance sheet: Assets Cash Accounts receivable Inventory Building net Investment in Sargent $680,000 1,280,000 1,940,000 7,524,000 2,765,000 $14,189,000 $240,000 348,000 447,000 1,583,000 0 $2,618,000 Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings $1,037,000 3,312,000 1,635,000 1,215,000 6,990,000 $14,189,000 $348,000 500,000 200,000 530,000 1,040,000 $2,618,000 Picasso Industries Sargent Corporation Income statement: Sales Cost of goods sold Gross profit Depreciation expense Operating expenses Equity Income (loss) Net income $11,100,000 (7,235,000) 3,865,000 (260,000) (1,900,000) 125,000 $1,830,000 $2,085,000 (1,100,000) 985,000 (85,000) (390,000) 0 $510,000 Picasso Industries Sargent Corporation Statement of retained earnings: Retained earnings December 31, 2019 Net income Dividends Retained earnings December 31, 2020 $5,720,000 1,830,000 (560,000) $6,990,000 $730,000 510,000 (200,000) $1,040,000 Picasso Industries, a large publicly traded US corporation, purchased all of the outstanding stock of Sargent Corporation on January 1, 2016 for $2,520,000. On January 1, 2016 the book value of Sargent's net assets was $800,000. $500,000 of the excess fair value price was attributed to a building with a 20-year remaining life, $420,000 to a technology asset with a 7-year remaining life and a zero book value on Sargent's books, and the balance was allocated to goodwill. Picasso records the investment in Sargent on its books using the equity method. During 2020 an impairment test is undertaken on goodwill. As a result of this test it was determined that the goodwill needed to be (and was) written down by $300,000. This write-down is reflected in the equity income reported by Picasso Industries. Following are the individual company financial statements for the year ended December 31, 2020: Picasso Industries Sargent Corporation Balance sheet: Assets Cash Accounts receivable Inventory Building net Investment in Sargent $680,000 1,280,000 1,940,000 7,524,000 2,765,000 $14,189,000 $240,000 348,000 447,000 1,583,000 0 $2,618,000 Liabilities and stockholders' equity Current liabilities Long-term liabilities Common stock APIC Retained earnings $1,037,000 3,312,000 1,635,000 1,215,000 6,990,000 $14,189,000 $348,000 500,000 200,000 530,000 1,040,000 $2,618,000 Picasso Industries Sargent Corporation Income statement: Sales Cost of goods sold Gross profit Depreciation expense Operating expenses Equity Income (loss) Net income $11,100,000 (7,235,000) 3,865,000 (260,000) (1,900,000) 125,000 $1,830,000 $2,085,000 (1,100,000) 985,000 (85,000) (390,000) 0 $510,000 Picasso Industries Sargent Corporation Statement of retained earnings: Retained earnings December 31, 2019 Net income Dividends Retained earnings December 31, 2020 $5,720,000 1,830,000 (560,000) $6,990,000 $730,000 510,000 (200,000) $1,040,000