Problem 2. Noucontrolling Interest Pacer Hotels bought 80% of Southern Resorts' voting stock on January 1, 2020 for $35,000. The fair value of the noncontrolling interest in Southem was $7,000 at the date of acquisition. Fair value information on Southem's assets and liabilities at the date of acquisition is as follows: c. Prepare the consolidation journal entries on December 31, 2020 on the work sheet (15 pts) 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 S2,000 in 2020 Goodwill reported for this acquisition is not impaired in 2020 The December 31, 2020 trial balances for Pacer and Southerm are as follows uther r (Cr ent assets 10 vestment in Southen abilities 90 37,5 Q4,500) ital stock reasury stock ales revenue 40,000 ned earnings, Jan. 1 30,000 (3,100 (84,000) (2,960 in NI of Southern of goods sold es atmg 15.00 Pacer uses the complete equity method to account for its investment in Southern on its own books. a. Prepare a schedule calculating the initial value of goodwill for this acquisition, and its allocation to the parent and to the poncontrolling interest. (4 pts) b. Calculate Pacer's equity in net income of Southern for 2020, reported on Pacer's books, and the poncontrolling interest in consolidated net income for 2020, shown on the 2020 consolidated income statement. (4 pts) Problem 2. Noucontrolling Interest Pacer Hotels bought 80% of Southern Resorts' voting stock on January 1, 2020 for $35,000. The fair value of the noncontrolling interest in Southem was $7,000 at the date of acquisition. Fair value information on Southem's assets and liabilities at the date of acquisition is as follows: c. Prepare the consolidation journal entries on December 31, 2020 on the work sheet (15 pts) 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 S2,000 in 2020 Goodwill reported for this acquisition is not impaired in 2020 The December 31, 2020 trial balances for Pacer and Southerm are as follows uther r (Cr ent assets 10 vestment in Southen abilities 90 37,5 Q4,500) ital stock reasury stock ales revenue 40,000 ned earnings, Jan. 1 30,000 (3,100 (84,000) (2,960 in NI of Southern of goods sold es atmg 15.00 Pacer uses the complete equity method to account for its investment in Southern on its own books. a. Prepare a schedule calculating the initial value of goodwill for this acquisition, and its allocation to the parent and to the poncontrolling interest. (4 pts) b. Calculate Pacer's equity in net income of Southern for 2020, reported on Pacer's books, and the poncontrolling interest in consolidated net income for 2020, shown on the 2020 consolidated income statement. (4 pts)