Topic : Consolidation Subsequent to Date of Acquisition - Upstream Intercompany Inventory Sale - Cost Method On January 1 , 2016, Fuller Company acquired a 80% interest in Wilson Company for a purchase* price that was $240, 000 over the book value of the Wilson's Stockholders " Equity on the acquisition date . Fuller uses the cast method to account for its investment in Wilson . On the date `of acquisition , Wilson's retained earnings balance was $218, 500 . Fuller assigned the acquisition - date ALAP as follows ! AAP Items Initial Fair Value* Useful Life I'vears ! PPE, net 150.000 20 Patent 90.000 15 $240.000 Wilson sells inventory to Fuller ( upstream ; which includes that inventory in products that it , ultimately , sells to customers outside of the controlled group ." "You have compiled the following data for the years Ending 2018 and 2019 : 2018 2019 Transfer price for inventory sale* $70,000 $94, 500 Cost of goods sold | 45,000 ) 16:4, 5001 Gross profit $ 25,000 $30, 000 ` inventory remaining* 20%/0 30% Gross profit deferred $ 5,000 $ 9,000 EOY' Receivable / Payable* $ 29, 500 $ 32, 000 The inventory not remaining at the end of the year has been sold outside of the controlled group . The parent and the subsidiary report the following financial statements at December 3 1 , 2019:Income Statement Fuller Wilson Sales $4, 160, 000 $ 401, 600 Cost of goods sold 13, 098, 100) 1232, 700) Gross Profit 1 , 061 , 900 168.900 Income ( loss ) from subsidiary 7 , 120 Operating Expenses (71 1, 200) (89, 900 ) Net income $ 357, 820 79,000 Statement of Retained Earnings Fuller Wilson BOY" Retained Earnings $2,583, 800 $ 404, 400 Net income* 357, 820 79,000 Dividends 174, 50 0) (18, 900 ) EDY" Retained Earnings $2, 867, 120 $474, 500Balance Sheet FULLER Wilson Assets" Cash $ 3.09, 420 $ 4, TOO Accounts receivable* $33, 600 1 13, 200 Inventory 5:41, 900 142, 100 Investment in subsidiary $20, 000 PPE, net 4, 063, 200 8.00, 500 $6, 068, 120 $ 1, 140, 500 Liabilities and Stockholders ' Equity . Current Liabilities $ 505, 900 99, 500 Long-term Liabilities 703, 500 250, 000 Common Stock 402,000 75, 300 APIC 1. 585, 500 241, 200 Retained Earnings 2. 867. 120 $74, 500 $6, DEB, 120 $ 1, 140, 500 Required* { . Compute the EO'Y' noncontrolling interest equity balance* Prepare the consolidation journal entries .[ADJ] Investment in subsidiary 1 12, 320 Retained earnings 1 12, 320 To restate the investment in subsidiary account from cost to as - if equity method