Problem 5-31 (LO 5-2,5-3,5-4,5-5) On January 1, 2017, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $312.000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $184,400. Also, the acquisition date fair value of the 40 percent noncontrolling interest was $200,000. The subsidiary held patents with a 10-year remaining life, that were undervalued within the company's accounting records by $83.200 and an unrecorded customer list (15-year remaining life) assessed at a $58.800 Fair value. Any remaining excess acquisition date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year end, there are no intra-entity payables or receivables. Intra-entity Inventory sales between the two companies have been made as follows: Year Cost to McIlroy 5132, see 113,1ee Transfer Price to Stinson $166,125 150,Bee Ending Balance (at transfer price) $55,325 32,70 2018 The individual financial statements for these two companies as of December 31, 2018, and the year then ended follow McIlroy, Inc. $ (767,000) Stinson, Inc. ( 2.000) 79,400 5 35,945) (91,456) $ 69,600) Cost of goods sold Operating expenses Equity in earnings in Stinson Net Income Retained earnings, 1/1/18 Net Income Dividends declared Retained earnings, 12/31/18 Cash and receivables (254,300 (91,456) $ (333,700) an 377.657 Investment in S Buildings (net) Equipment (net) 251,200 $ 1,548,467 Total assets Liabides Common stock Retained earnings, 12/31/18 Total liabilities and equities 5(1,548,467) a. Show how Mcllroy determined the $377,467 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31 2018 Complete this question by entering your answers in the tabs below. Required A Required Show how Mcllroy determined the $377.467 Investment in Stinson account balance. Assume that Melry defers 100 percent of downstream intrarentit ofits acainst its share of Stinson's income $ 607,000 Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities $ 1,548,467 5 (392,211) (30. ) (1 ) $(1.48.467) $ (607,) a. Show how Mcllroy determined the $377,467 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2018 Complete this question by entering your answers in the tabs below. Required A Required B Show how Metroy determined the $377,467 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intraentity profits against its share of Stinson's income. Consideration transferred Increase in Stinson's retained eamingst/4/17 11/1/18 Excess fair value amortization 2017 ending inventory profit deferral Mcllroy's equity in earnings of Stinson for 2018 Stinson 2015 dividends dered to Metroy Investment count balance 12/31/18 0 S 0 Required B > OBL9W Required A Required B Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2018 where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the deb worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Debit and Credit columns should be entered as positive. Negative amounts for the NCI and Consolidated Totals columns shoul minus sign.) NCI Consolidated Totals MCILROY, INC., AND STINSON, INC. Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Mellroy Stinson Debit Credit (747.000) S (382.000)| 400.000 233,200 200.590 70.400 T (35.948) OF (01.450) (00.400) S Accounts Sales Cost of goods sold Operating expenses Equity in earnings of Stinson Separate company net income Consolidated net income To non controling interest To Mcllroy, Inc. Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Customer list Goodwill Total assets biles Common stock Noncontrolling interest 11 Noncontrolling interest 12/31 Retained earnings 12/31 Total basties and equities $ 5 5 (814.500) (01.456) 40.700 (854.250 3 201,000 274 200 377,487 353.000 251.000 0 (284.300) (60.400) 20.000 3 33.7001 151.900 132 400 of 207.2007 90.600 2 5,300 $ 5 0 1,548.467 S (302.211) (300.000) 6 07 400 (173,700)| (100,000) (856 260) (1,548.487) 3 (383,700) 0 7 40033 0 3 0 5