QUESTION 1 On January 1, 2018, Plymouth Corp purchased 100.00% of the net assets of Shelby Corp for $253,841. The write-up of the Buildings and Equipment from book value to fair market value amounted to 55.00% of the total differential. The write-up of the Land from book value to fair market value amounted to 10.00% of the total differential. The remaining 35.00% of the total differential is attributable to Goodwill. The remaining useful life of the Buildings and Equipment is assumed to be 10 years. Goodwill is impaired at the end of 2018 and 2019 and must be written down, each year, by 15.00% of its original (ntal value. The company uses the equity method approach to account for the goodwill impairment. A complete set of financial statements for focal years 2018 and 2019 for Plymouth Corp is located in Exhibit 1. A complete set of financial statements for fiscal years 2018 and 2019 for Shelby Corp is located in Exhibit 2. 1) Based on the purchase price, calculate the total differential in dollars), as well as the differential in dollars) applied to: Buildings and Equipment) Land and Goodwill (SHOW ALL WORK IN THE CALCULATION) 2) For fiscal year 2018, provide ALL journal entries (and t-accounts) used by the parent company to account for its investment in the subsidiary using the equity method 3) For fiscal year 2018 provide ALL eliminating entries (and accounts) necessary to create consolidated financial statements 4) For fiscal year 2015, create the consolidated Snancial statements using the 3-step work For fiscal year 2019. provide ALL journal entries (and accounts) used by the parent company to account for its investment in the subsidiary using the 6) For fiscal year 2019 provide ALL eliminating entries (and accounts) necessary to create consolidated financial statements 7) For fiscal year 2019, create the consolidated Inancial statements using the 3-step work Exhibit 1 EXAM NO. 30 Plymouth 12/31/18 INCOME STATEMENT Sales CGS $ Deprec and Amort Other Expenses Company Net Income Income from Subsidiary (Shelby) Net Income STATEMENT OF RETAINED EARNINGS Retained Earnings 1/1.007 Net Income (from Above Dividends Declared Retained Earnings 120107 BALANCE SHEET Cash AR Inventory Land Bud&Equip HC Ace Dep Bud&Equip Net Investment in Subsidiary (c) Goodwill Differential Total Assets AP Bonds Payable Plymouth 12/31/10 932 750 $1,026,025 $ 666.250 $ 732875 $ 33.313 $ 33.313 99937 $109.931 $133.250 $140,000 $ 74,149 $ 61,944 207399231.350 $290000 $430.774 207399 $231,850 500025115.925 $430.774 $546,899 $ 330.384 $418,457 $ 91275 $ 102,803 $233,186 $256,506 $ 106.600 $106.800 $ 66,250 $ 666.750 5 163.3135196.625 $ 502.937 $460,25 5301340 $348,186 $ $ $1.576,724 $1,701,976 $ 93.275 $102,603 $ 519.675 $519,475 $ 612.950 $622.277 Total Labe Shareholders Equity Common Stock Retained Earnings them above Total Shareholders Equity TL TSE Balance $533,000 $533,000 E430774546.599. $ 963774 $1079.099 $1.576.724 $1.701.976 $