Question 8 Incomplete answer Marked out of 229.00 P Flag question Consolidation subsequent to date of acquisition - Equity method with noncontrolling interest and AAP Assume that, on January 1, 2009, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $500,000 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 (years) Initial Useful [A] Asset Fair Value Life (years) Property, plant and equipment (PPE), net $90,000 10 Customer list 160,000 Goodwill 250,000 Indefinite $500,000 10 80% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following financial statements at December 31, 2013: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $7,330,000 $1,873,000 Assets Cost of goods sold (5,131,000) (1,122,300) Cash $413,313 $134,011 Gross profit 2,199,000 750,700 Accounts receivable 938,240 433,956 Income (loss) from subsidiary 191,496 Inventory 1,422,020 557,409 Operating expenses (1,392,700) (486,330) Equity investment 1,477,671 Net income $997,796 264,370 Property, plant and equipment (PPE), net 5,374,356 1,280,669 $9,625,600 $2,406,045 Statement of retained earnings: BOY retained earnings $3,682,592 $966,425 Liabilities and stockholders' equity Net income 997,796 264,370 Current liabilities $1,053,321 $433,956 Dividends (199,159) (39,281) Long-term liabilities 2,000,000 500,000 EOY retained earnings $4,481,229 $1,191,514 Common stock 1,198,455 124,700 APIC 892,595 155,875 Retained earnings 4,481,229 1,191,514 $9,625,600 $2,406,045 b. Calculate and organize the profits and losses on intercompany transactions and balances. Downstream Upstream Jan. 1, 2013 Intercompany transaction Dec 31, 2013 Intercompany transaction 0 0 0 C. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Round answers to the nearest whole number. Equity investment at 1/1/13. Common stock APIC Retained earnings Unamortized AAP 24,940 31,175 238,303 0 0 Equity investment at 12/31/13: Common stock APIC Retained earnings Unamortized AAP 958,764 714,076 3,584,983 0 0 d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. Round answers to the nearest whole number. Equity Investment 0 0 Balance at 1/1/13 Net income 0 O Dividends O AAP amortization 0 Balance at 12/31/13 0 0 d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. Round answers to the nearest whole number. Equity Investment Balance at 1/1/13 0 Net income 0 O Dividends O AAP amortization 0 Balance at 12/31/13 0 e. Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Round answers to the nearest whole number 0 Noncontrolling interest at 1/1/13: Common stock APIC Retained earnings Unamortized AAP 0 0 0 0 Noncontrolling interest at 12/31/13: Common stock 0 0 0 Retained earnings Unamortized AAP . 0 0 f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Round answers to the nearest whole number. Use negative signs with answers that are reduce net income. 0 0 0 0 0 Consolidated: Parent's stand-alone net income Subsidiary's stand-alone net income Less: 80% AAP amortization Subsidiary's adjusted stand-alone net income Consolidated net income Parent: Parent's stand-alone net income Subsidiary's stand-alone net income Less: 80% AAP amortization 80% of subsidiary's stand-alone net income Consolidated net income attributable to the parent Subsidiary: 20% of subsidiary's stand-alone net income Less: 80% AAP amortization 0 0 0 0 0 0 0 0 Credit 0 0 0 0 0 0 APIC 0 g. Complete the consolidating entries according to the C-E-A-D-I sequence. Consolidation Worksheet Description Debit [C] Equity income 0 Noncontrolling interest 0 Dividends 0 Equity investment 0 Noncontrolling interest 0 [E] Common stock 0 0 Retained earnings 0 Equity investment 0 0 [A] Property, plant and equipment (PPE), net 0 Customer list 0 Goodwill 0 Equity investment 0 Equity investment 0 [D] Property, plant and equipment (PPE), net 0 Goodwill 0 Customer list 0 0 0 0 0 0 0 0 0 0 0 0 Please answer all parts of the