Question 4 Partially correct Marked out of 10.00 Flag question Edit question Determining ending consolidated balances in the second year following the acquisition-Equity method Assume a parent company acquired a subsidiary on January 1, 2021. The purchase price was $570,000 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: Original Original Useful Life Amount (years) [A] Asset Property, plant and equipment (PPE), net $270,000 Goodwill 12 300,000 $570,000 Indefinite The AAP asset relating to undervalued PPE with a 12-year useful life has been depreciated as part of the parent's equity method accounting. The financial statements of the parent and its subsidiary for the year ended December 31, 2022, are as follows: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $4,500,000 $1,125,000 Assets Cost of goods sold (2,625,000) (675,000) Cash $545,250 $289,500 Gross profit 1,875,000 450,000 Accounts receivable Equity income 127,500 Inventory Operating expenses Net income (750,000) $1,252,500 (300,000) Equity investment 750,000 261,000 1,200,000 331,500 1,404,750 $150,000 Property, plant and equipment (PPE), net 3,600,000 618,000 $7,500,000 $1,500,000 Statement of retained earnings: BOY retained earnings $750,000 $585,000 Liabilities and stockholders' equity Net income 1,252,500 150,000 Accounts payable $675,000 $105,000 Dividends Ending retained earnings (157,500) $1,845,000 (24,000) Accrued liabilities 900,000 140,250 $711,000 Long-term liabilities APIC Common stock Retained earnings 2,100,000 480,000 1,500,000 375,000 75,000 93,750 1,845,000 711,000 $7,500,000 $1,500,000 At what amount will the following accounts appear on the consolidated financial statements? Note: Do not use negative signs with your answers. a. Sales $ 5,625,000 b. Equity income $ 127,500 x c. Operating expenses $ 1,050,000 x d. Accounts receivable $ 1,011,000 e. Equity investment $ f. Property plant and equipment (PPE) net $ 4,465,500 x g. Goodwill $ 300,000 h. Common stock $ 480,000 i. Retained earnings $ 1,845,000