QUESTION 2 Not complete Marked out of 51.00 PFlag question Inferring consolidation entries from consolidated financial statements-Cost methood Assume a parent company acquired a subsidiary on January 1, 2012. The purchase price was $1,362,000 in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date, and that excess was assigned to the following [A] assets: A] Asset Property, plant and equipment (PPE), net Patent Goodwil Original Amount Original Useful Life 20 years 12 years Indefinite 300,000 432,000 630,000 $1,362,000 The parent company uses the cost method of pre-consolidation Equity Investment bookkeeping. The Goodwill asset has been tested annually for impairment and has not been found to be impaired. Selected accounts from the parent, subsidiary, and consolidated financial statements for the year ended December 31, 2016, are as follows: Parent Subsidiary Consolidated Income statement Sales Cost of goods sold Gross profit Investment income Operating expenses $9,075,000 $2,020,000 11,095,000 (6,534,000) (1,188,000) 7.722,000) 832,000 3,373,000 2,541,000 80,800 (1,361,280) (514,800) (1,927,080) $1,260,520 $317,200 $1,445,920 Net income Statement of retained earnings BOY retained earnings Net income Dividends 6,614,440 1,445,920 (326,440) $7,262,520 $1,299,400 $7,733,920 6,328,440 1,063,000 1,260,520 317,200 1 (326,440) (80,800) Ending retained earnings Balance sheet Assets Cash Accounts receivable Inventory Equity investment Property, plant & equipment Patent list 1,709,760 551,200 2,686,800 59,600 3,1 3,520,200 589,800 2,232,000 2,260,960 3,146,400 4,110,000 12,752,640 1,091,400 14,069,040 252,000