PROBLEM 3: (38 points) Potter Corporation acquired 80 percent ownership of Snape Company on January 1, 2021, for $160,000. On that date, the fair value of the noncontrolling interest was $40,000, and Snape reported retained earnings of $45,000 and had $105,000 of common stock outstanding. Potter has used the equity method throughout the year for its accounting for its investment in Snape. Pre-consolidated trial balance data for the two companies on December 31, 2025, can be found in the accompanying Excel file. (Additional information: On the date of acquisition, the fair value of Snape's depreciable assets was $50,000 more than book value. The AAP assigned to depreciable assets should be written off over a 10-year period from such date.) Required: a. Prepare a schedule computing 100% of the goodwill on the date of acquisition. b. Prepare a schedule allocating the goodwill to Potter and the NCI. C. Prepare all journal entries that Potter recorded during 2025 related to its investment in Snape prior to consolidation. (Hint: There should be three entries.) d. Prepare a worksheet to consolidate the accounts of the two companies on December 31, 20X5. Please label the consolidation entries appropriately (C, E, A, D). Problem 3 Data Pre-Consolidated Trial Balance Data for the Year Ended December 31, 2025 Potter Snape $ Income Statement: Sales COGS Depreciation Expense Inventory Losses Income from Sunflower Net Income 200,000 $ (120,000) (25,000) (15,000) 20,000 60,000 $ 100,000 (50,000) (15,000) (5,000) $ 30,000 $ Statement of Retained Earnings: Beginning Balance Net Income Dividends Declared Ending Balance 314,000 $ 60,000 (30,000) 344,000 $ 90,000 30,000 (10,000) 110,000 $ $ Balance Sheet: Assets: Cash and Receivables Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Sunflower Company Total Assets 81,000 $ 260,000 80,000 500,000 (205,000) 188,000 904,000 $ 65,000 90,000 80,000 150,000 (105,000) $ 280,000 $ Liabilities & Stockholders' Equity: Accounts Payable Notes Payable Common Stock Retained Earnings Total Liabilities & Equity 60,000 $ 200,000 300,000 344,000 904,000 $ 20,000 50,000 100,000 110,000 280,000 $