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Use the following fact pattern to answer multiple choice questions 1 through 15, with sub-instructions for particular questions: On January 1, 2018, Parent Co. acquired

Use the following fact pattern to answer multiple choice questions 1 through 15, with sub-instructions for particular questions: On January 1, 2018, Parent Co. acquired 80% of Sub Inc. by paying $800,000. Non-controlling interest was valued at $200,000. Sub reported common stock on that date of $520,000 with retained earnings of $352,000. A building was undervalued in the company's financial records by $18,000. This building had a ten-year remaining life. Copyrights of $80,000 were not recognized and should be amortized over 20 years. Sub earned income and paid cash dividends as follows:

Net Income Dividends Paid

2018 $115,000 $64,600

2019 $144,400 $71,600

2020 $164,000 $94,000

On December 31, 2020, the Parent owed $20,800 to Sub Inc. There have been no changes in Sub's common stock account since the acquisition. To answer questions 1 through 3, prepare the allocation of the acquisition on January 1, 2018. In your presentation, but sure to show the excess fair value over cost allocated to the identifiable assets, and any resulting goodwill. In addition, for the identifiable assets, be sure to calculate the annual amortization of excess fair value over book value.

Questions 12 and 13 requires use of Exhibit 1 below for 2020:

Exhibit 1: Worksheet for Income Statement (2020)

Income Statement Parent Sub Co. Debit Credit NCI Consolidated Revenues (810,000) (504,000) Cost of Goods Sold 344,000 200,000 Depreciation Expense 60,000 20,000 Amortization Expense 170,000 120,000 Equity in Sub Earnings 0 Separate Net Income

Note: Equity in Sub Earnings above has been intentionally left blank as well as separate net incomes. 12. Calculate the Non-controlling interest income for 2020 using Exhibit 1 above. How much is the NCI income for 2020? A. $32,800. B. $32,480. C. $31,640. D. $32,000. 13. Calculate the controlling interest income for 2020 using Exhibit 1 above. How much is the controlling interest income for 2020? A. $362,560. B. $394,200. C. $236,000.

D. $354,800.

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