REQUIRED:
1. Determine the Goodwill assigned to Non-controlling interest at the acquisition date. (2 points)
2. Prepare supporting amortization of ECOBV schedule for 2020 and verify the equity in income balance for 2020, as reported on Larges separate income statement. (3 points)
3. Calculate the balance of NCI at December 31, 2020. Provide detail calculations. (5 points)
4. Complete a consolidated worksheet as of December 31, 2020. (15 points).
PPE Goodwill Large Company acquired for 80% of the voting stock of Small Company on January 1, 2013 paying $10,000,000 in cash. Large accounts for its investment using the equity method. Small's stockholders' equity at the date of acquisition was $6,000,000 ($2,000,000 capital stock, $4,000,000 retained earnings). The estimated fair value of the non-controlling interest in Small Company at the date of acquisition is $2,400,000. As of the date of acquisition: Overvalued by $3,000,000 20-year useful life, straight-line Identifiable intangibles Undervalued by S5,500,00010-year useful life, straight-line Long-term debt Undervalued by $100,000 5-year till maturity, straight-line Impairment: $625,000 in total for 2013- |2019; $50,000 for 2020 Note: The impairment in goodwill is distributed between controlling and non-controlling interest based on the percentage of goodwill each of them gets (for example, if the non- controlling interest gets 5% of the entire goodwill, they also get 5% of the impairment). The 2020 pre-closing trial balances for Large and Small are in thousands): Large Company Small Company Dr (Cr) (35,000) Equity in net income of Small Cost of goods sold Other operating expenses Net Income Dr (Cr) Sales revenue (20,000) (359) 29,000 5,700 (659) 14,000 5.100 (900) 6,000 29,7001 Current assets Plant & equipment, net Investment in Small Total Assets 20,000 55,000 12,327 87,327 35,700 Current liabilities Long-term debt Capital stock Retained earnings, Jan. 1 Net Income Dividends Total Liab, and Equity (15,000) (20,000) (30,000) (21,768) (659) 100 (87,327) (6,000) (17,000) (2,000) (10,000) (900) 2001 (35,700 PPE Goodwill Large Company acquired for 80% of the voting stock of Small Company on January 1, 2013 paying $10,000,000 in cash. Large accounts for its investment using the equity method. Small's stockholders' equity at the date of acquisition was $6,000,000 ($2,000,000 capital stock, $4,000,000 retained earnings). The estimated fair value of the non-controlling interest in Small Company at the date of acquisition is $2,400,000. As of the date of acquisition: Overvalued by $3,000,000 20-year useful life, straight-line Identifiable intangibles Undervalued by S5,500,00010-year useful life, straight-line Long-term debt Undervalued by $100,000 5-year till maturity, straight-line Impairment: $625,000 in total for 2013- |2019; $50,000 for 2020 Note: The impairment in goodwill is distributed between controlling and non-controlling interest based on the percentage of goodwill each of them gets (for example, if the non- controlling interest gets 5% of the entire goodwill, they also get 5% of the impairment). The 2020 pre-closing trial balances for Large and Small are in thousands): Large Company Small Company Dr (Cr) (35,000) Equity in net income of Small Cost of goods sold Other operating expenses Net Income Dr (Cr) Sales revenue (20,000) (359) 29,000 5,700 (659) 14,000 5.100 (900) 6,000 29,7001 Current assets Plant & equipment, net Investment in Small Total Assets 20,000 55,000 12,327 87,327 35,700 Current liabilities Long-term debt Capital stock Retained earnings, Jan. 1 Net Income Dividends Total Liab, and Equity (15,000) (20,000) (30,000) (21,768) (659) 100 (87,327) (6,000) (17,000) (2,000) (10,000) (900) 2001 (35,700
