The parent acquired 75% of the subsidiary company on January 1^st 2017 for $675,000 and on that date the subsidiary company had stockholders equity accounts equal to 150,000 common stock, 170,000 paid in capital and 225,000 of retained earnings.

On the acquisition date the subsidiary companys book values were equal to fair values for all items except for Equipment which was undervalued by $50,000 with a 5 year service live and a patent valued at $160,000 with a 10 year service life and the remaining value will be assigned to Goodwill.

On January 1, 2018 the subsidiary company sold land to the parent company for $330,000. On this date the land had a historical cost carried in the Subsidiarys PPE of $255,000.

The parent regularly sells merchandise to the subsidiary with a profit margin of 35% of selling price. In 2019 the intercompany sales amounted to $220,000 of which $40,000 remains in ending inventory as of 12/31/2019. There is a $35,000 intercompany sales amount that remains unpaid. Additionally, during 2018, the parent sold $215,000 of merchandise to the sub of which $45,000 remained in ending inventory on 12/31/2018.

Finally, The Parent company issued $500,000 face value 5% 15-year bonds to an unaffiliated party for $515,000 on January 1^st 2016. December 31, 2018 the Subsidiary company paid $485,000 to purchase all of the outstanding subsidiary companys bonds from 3^rd parties.

December 31, 2019 are presented following the requirements.

Using the Problem Data given in this week's file folder. Complete the following: (10 points - 2.5 points each)

Reconcile the Equity Income starting with the Subs Net Income

Reconcile the Equity Investment Account

Compute the value in the NCI Account

Compute the amount of the deferred gain on the upstream sale of land (remember NCI will share)

Prepare the entries for the parent and the sub related to the bond transactions (to record the initial issuance, annual interest and the effective retirement)

Please create an excel worksheet (preferred) or word document to show the computations and numbers to provide support for the answers to the 4 bullet point requirements above.

Use Excel to create a consolidating worksheet Submission 2 (15 points)

Prepare the Consolidating Worksheet for the Financial Statements in Excel

Use the textbook layout to create the excel spreadsheet and watch my videos.

Put the code (C,E, A, D, I) in a separate column and color code all accordingly.

Use formulas in Excel for the your Total Column and Total rows.

Parent Subsidiary