Problem 53. Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest and AAP Assume, on January 1, 2015, a parent company acquired a 90% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: [A] Asset Initial Fair Value Useful Life Property, plant and equipment Customer list. Goodwill.. $160,000 96,000 224,000 10 years 5 years Indefinite $480,000 90% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2019: Parent Subsidiary Parent Subsidiary Balance sheet: Cash Accounts receivable $ $1,520,000 (960,000) 560,000 Income statement: Sales.. Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses. Net income 80,000 200,000 $5,760,000 (4,000,000) 1,760,000 112,320 (1,120,000) $ 752,320 440,000 $ 400,000 752,000 960,000 921,600 2,240,000 Inventory. Equity investment Property, plant and equipment, net (400,000) $ 160,000 720,000 $1,440,000 $5,273,600 Statement of retained earnings: Beginning retained earnings. $1,401,280 Net income 752,320 Dividends (160,000) Ending retained earnings $1,993,600 $ 400,000 160,000 (40,000) $ 520,000 Current liabilities. Long-term liabilities. Common stock Additional paid-in capital. Retained earnings $ 800,000 1,600,000 160,000 720,000 1,993,600 $5,273,600 $ 320,000 400,000 80,000 120,000 520,000 $1,440,000 Requirements: a. Independently calculate equity income and non-controlling interest net income. b. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet. Problem 53. Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest and AAP Assume, on January 1, 2015, a parent company acquired a 90% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: [A] Asset Initial Fair Value Useful Life Property, plant and equipment Customer list. Goodwill.. $160,000 96,000 224,000 10 years 5 years Indefinite $480,000 90% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2019: Parent Subsidiary Parent Subsidiary Balance sheet: Cash Accounts receivable $ $1,520,000 (960,000) 560,000 Income statement: Sales.. Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses. Net income 80,000 200,000 $5,760,000 (4,000,000) 1,760,000 112,320 (1,120,000) $ 752,320 440,000 $ 400,000 752,000 960,000 921,600 2,240,000 Inventory. Equity investment Property, plant and equipment, net (400,000) $ 160,000 720,000 $1,440,000 $5,273,600 Statement of retained earnings: Beginning retained earnings. $1,401,280 Net income 752,320 Dividends (160,000) Ending retained earnings $1,993,600 $ 400,000 160,000 (40,000) $ 520,000 Current liabilities. Long-term liabilities. Common stock Additional paid-in capital. Retained earnings $ 800,000 1,600,000 160,000 720,000 1,993,600 $5,273,600 $ 320,000 400,000 80,000 120,000 520,000 $1,440,000 Requirements: a. Independently calculate equity income and non-controlling interest net income. b. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet
