Prickly Hotels acquired 80% of Sickly Resorts voting stock on January 1, 2020 for $35,000. The fair value of the noncontrolling interest in Sickly was $7,000 at the date of acquisition. Fair value information on Sicklys assets and liabilities at the date of acquisition is as follows:

• Property and equipment is overvalued by $7,000. P&E has a 10-year remaining life, straight-line.
• Previously unreported identifiable intangibles are valued at $8,000. These intangibles have indefinite lives but testing reveals impairment of $2,000 in 2020.
• Goodwill reported for this acquisition is not impaired in 2020.

The December 31, 2020 trial balances for Prickly and Sickly are as follows:

	Prickly Dr (Cr)	Sickly Dr (Cr)
Current assets	$ 21,900	$ 10,000
Property & equipment, net	90,000	60,000
Investment in Sickly	37,560
Liabilities	(74,500)	(57,500)
Capital stock	(40,000)	(5,000)
Retained earnings, Jan. 1	(30,000)	(3,100)
Treasury stock	2,000	100
Dividends		500
Sales revenue	(84,000)	(50,000)
Equity in NI of Sickly	(2,960)
Cost of goods sold	55,000	30,000
Operating expenses	25,000	15,000
Total	$ 0	$ 0

Prickly uses the complete equity method to account for its investment in Sickly on its own books.

Required

a. Prepare a schedule calculating the initial value of goodwill for this acquisition, and its allocation to the parent and to the noncontrolling interest.

b. Calculate Pricklys equity in net income of Sickly for 2020, reported on Pricklys books, and the noncontrolling interest in consolidated net income for 2020.

c. Create the Consolidating Working Paper Entries (CERON) and prepare complete the working paper to consolidate the December 31, 2020 trial balances of Prickly and Sickly.

Entries must be in the format of:

C

E

R

O

N