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Un January 1, LULU, McIIroy, Inc., acquired a bU percent Interest in the common stock of Stnson, Inc., tor $348,UUU. Stnson's book value on that

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Un January 1, LULU, McIIroy, Inc., acquired a bU percent Interest in the common stock of Stnson, Inc., tor \$348,UUU. Stnson's book value on that date consisted of common stock of $100,000 and retained earnings of $205,800. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $232,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $52,300 and an unrecorded customer list (15-year remaining life) assessed at a $46,800 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: The individual financial statements for these two companies as of December 31,2021 , and the year then ended follow: (Note: Parentheses indicate a credit balance.) a. Show how Mcllroy determined the $401,025 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31 , 2021. Show how McIlroy determined the $401,025 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of definntrom intra-entity profits against its share of Stinson's income. (Amounts to be deducted should be indicated with a Required B ( )

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