Ws) On January 2, 2018, Putney Industries acquired all of Steico Corporation's voting stock for $10,000. Steico's book value at the date of acquisition was $6,500. Total goodwill of $2,500 was recognized at the date of acquisition. Steico's reported assets and liabilities had book values that approximated fair value at the date of acquisition, but it had previously unreported customer lists (5-year life, straight-line) valued at $1,000 It is now December 31, 2021, four years after the date of acquisition. Goodwill impairment for the years 2018-2020 totaled $300, and goodwill impairment for 2021 is $50. No impairment losses were reported for the customer lists for any year since acquisition. December 31, 2021 trial balances for Putney and Steico are shown in the consolidation working paper that follows. Required a. Calculate 2021 equity in net income of Steico, reported on Putney's separate books. Putney uses the complete equity method to account for its investment in Steico. b. Fill in the eliminating entries (C), (E), (R), and (0) to consolidate the accounts of the two companies at December 31, 2021, using the consolidation working paper. D Putney Steico Dr (Cr) Consol. Current assets Dr (Cr) $ 2,500 Dr Cr $ 5,000 Dr (Cr) Fixed assets, net 49,300 24,920 500 ID intangibles Investment in Steico 12,770 Goodwill Liabilities (22,000) Capital stock (17,000) (2,000) 2000 (15,000) Retained earnings, Jan. 1 (27,900) (7,200) 7200 AOCI, Jan. 1 (600) (400) 902 Sales revenue (25,000) (12,000) 1000 Equity in NI-Steico (550) Equity in OCI -Steico 538 (20) Cost of goods sold 20,000 7,000 Operating expenses 4,000 4,200 Other comprehensive income (20) 20 Total $ 0$ 0 Ws) On January 2, 2018, Putney Industries acquired all of Steico Corporation's voting stock for $10,000. Steico's book value at the date of acquisition was $6,500. Total goodwill of $2,500 was recognized at the date of acquisition. Steico's reported assets and liabilities had book values that approximated fair value at the date of acquisition, but it had previously unreported customer lists (5-year life, straight-line) valued at $1,000 It is now December 31, 2021, four years after the date of acquisition. Goodwill impairment for the years 2018-2020 totaled $300, and goodwill impairment for 2021 is $50. No impairment losses were reported for the customer lists for any year since acquisition. December 31, 2021 trial balances for Putney and Steico are shown in the consolidation working paper that follows. Required a. Calculate 2021 equity in net income of Steico, reported on Putney's separate books. Putney uses the complete equity method to account for its investment in Steico. b. Fill in the eliminating entries (C), (E), (R), and (0) to consolidate the accounts of the two companies at December 31, 2021, using the consolidation working paper. D Putney Steico Dr (Cr) Consol. Current assets Dr (Cr) $ 2,500 Dr Cr $ 5,000 Dr (Cr) Fixed assets, net 49,300 24,920 500 ID intangibles Investment in Steico 12,770 Goodwill Liabilities (22,000) Capital stock (17,000) (2,000) 2000 (15,000) Retained earnings, Jan. 1 (27,900) (7,200) 7200 AOCI, Jan. 1 (600) (400) 902 Sales revenue (25,000) (12,000) 1000 Equity in NI-Steico (550) Equity in OCI -Steico 538 (20) Cost of goods sold 20,000 7,000 Operating expenses 4,000 4,200 Other comprehensive income (20) 20 Total $ 0$ 0
