PROBLEM 2: On January 1, 2016 Venti Corporation exchanged $344,000 cash for a 90% interest in Krunk Corporations outstanding voting stock. Krunks acquisition balance sheet is in the accompanying Excel spreadsheet along with the financial statements for both companies for the year ended December 31, 2018.

On January 1, 2016, Venti prepared the following fair value allocation schedule:

Consideration transferred by Venti................................. 344,000

10% noncontrolling interest fair value.............................. 36,000

Fair value of Krunk.................................................... 380,000

Book value of Krunk................................................... 324,000

Excess fair value over book value.................................... 56,000

Allocated to equipment (remaining life=9 years)................ 18,000

Allocated to goodwill................................................. 38,000

Krunk
Balance Sheet
As of January 1, 2016
Cash and receivables	15,000
Inventory	35,000
Property and equipment (net)	350,000
TOTAL	400,000
Liabilities	76,000
Common stock	150,000
Retained earnings	174,000
TOTAL	400,000

Required:

1. Prepare a schedule showing the allocation of the goodwill to the controlling and noncontrolling interest.
2. Prepare a schedule showing the Ventis Equity in Krunks Earnings for 2016, 2017, and 2018.
3. Prepare a schedule showing how Venti determined the $488,900 balance in the Investment in Krunk account.