Prime Company (Prime) acquired 75 percent of the outstanding stock of Savory Snacks Company (Savory) at the beginning of 2015, for cash and stock totaling $120 million. Savorys assets and liabilities were fairly reported at the date of acquisition, except for these items:

(in thousands)	Book Value	Fair Value
Plant & Equipment, net (10-year life, straight-line)	$150,000	$135,000
Veggie Burger recipe (10-year life, straight-line)	0	25,000
Long-term debt (4-year life, straight-line)	30,000	34,000

Savorys book value at the date of acquisition was $74 million, and the fair value of the 25% noncontrolling interest was $35 million. It is now December 31, 2023 (the end of the ninth year since acquisition). Impairment testing on the goodwill arising in this acquisition reveals that total impairment during 20152022 is $2 million, and impairment in 2023 is $1 million.

Savory sells merchandise and raw materials to Prime at a markup of 30% on cost. Here is information on these intercompany sales (in thousands):

Inventory, January 1, 2023, reported on Prime's books	$10,400
Inventory, December 31, 2023, reported on Prime's books	13,000
Transfer price for 2023 sales from Savory to Prime	60,000

Below are the separate trial balances of Prime and Savory at December 31, 2023.

	Dr(Cr)
(in thousands)	Prime	Savory
Current assets	$35,000	$20,000
Plant and equipment, net	262,650	192,000
Investment in Savory	128,850	--
Identifiable intangibles	100,000	10,000
Current liabilities	(30,000)	(25,000)
Long-term debt	(350,000)	(100,000)
Capital stock	(80,000)	(54,000)
Retained earnings, January 1	(57,750)	(38,000)
Sales revenue	(400,000)	(140,000)
Equity in net income of Savory	(1,750)	--
Cost of sales	250,000	65,000
Operating expenses	143,000	70,000
Totals	$0	$0

In your answers below, present all numbers in thousands; round answers to the nearest thousand, if applicable.

Required (a) Calculate the initial goodwill arising from this acquisition, and its allocation to the controlling and noncontrolling interests.

Goodwill (in thousands)
Total goodwill	Answer
Prime's goodwill	Answer
Goodwill to noncontrolling interest	Answer

(b) Prepare a schedule computing Prime's equity in net income of Savory and noncontrolling interest in net income for 2023.

Use negative signs with answers that reduce net income amounts.

(in thousands)	Total	Equity in net income of Savory	Noncontrolling interest in net income of Savory
Savory's reported net income for 2023	Answer	Answer	Answer
Revaluation writeoffs for 2023:
Plant & Equipment	Answer	Answer	Answer
Intangibles	Answer	Answer	Answer
Goodwill	Answer	Answer	Answer
Intercompany sales adjustments:
Upstream beg. inventory profit confirmed	Answer	Answer	Answer
Upstream end. inventory profit unconfirmed	Answer	Answer	Answer
Total	Answer	Answer	Answer

(c) Prepare a working paper to consolidate the trial balances of Prime and Savory at December 31, 2023.

Remember to use negative signs with your credit balance answers in the Consolidated Balances Dr(Cr) column.

Consolidation Working Paper
	Trial Balances Taken From Books		Eliminations
(in thousands)	Prime Dr (Cr)	Savory Dr (Cr)		Debit	Credit		Consolidated Balances Dr (Cr)
Current assets	$35,000	$20,000			Answer	(I-3)	Answer
Plant and equipment, net	262,650	192,000	(O)	Answer	Answer	(R)	Answer
Investment in Savory	128,850	-			Answer	(C)	Answer
					Answer	(E)
					Answer	(R)
Identifiable intangibles	100,000	10,000	(R)	Answer	Answer	(O)	Answer
Goodwill	-	-	(R)	Answer	Answer	(O)	Answer
Current liabilities	(30,000)	(25,000)					Answer
Long-term debt	(350,000)	(100,000)					Answer
Capital stock	(80,000)	(54,000)	(E)	Answer			Answer
Retained earnings, Jan. 1	(57,750)	(38,000)	(I-2)	Answer			Answer
			(E)	Answer
Noncontrolling interest	-	-			Answer	(E)	Answer
					Answer	(R)
					Answer	(N)
Sales revenue	(400,000)	(140,000)	(I-1)	Answer			Answer
Equity in NI of Savory	(1,750)	-	(C)	Answer			Answer
Cost of goods sold	250,000	65,000	(I-3)	Answer	Answer	(I-2)	Answer
					Answer	(I-1)
Operating expenses	143,000	70,000	(O)	Answer			Answer
Noncontrolling interest in NI	-	-	(N)	Answer	-		Answer
Total	$0	$0		Answer	Answer		Answer