You are to create an Excel workbook with $4$Alternative Investment Methods, Goodwill Impairment, and Consolidated

Financial Statements

In this project, you are to provide an analysis of alternative accounting methods for controlling interest investments and subsequent

effects on consolidated reporting using Excel. Modeling in Excel helps you quickly assess the impact of alternative accounting methods

on consolidated financial reporting, and helps you develop a better understanding of accounting for combined reporting entities.

Consolidated Worksheet Preparation

You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different

methods of accounting for the investments $($equity$,$ initial value, and partial equity$)$ on the parent company's trial balance and on the

consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial

ratios of recognizing a goodwill impairment loss.

The project requires preparation of the following four separate worksheets:

a$.$ Consolidated information worksheet $($follows$).$

b$.$ Equity method consolidation worksheet.

c$.$ Initial value method consolidation worksheet.

d$.$ Partial equity method consolidation worksheet.

In formulating your solution, each worksheet should link directly to the first worksheet. Also, feel free to create supplemental schedules to

enhance the capabilities of your worksheet.

Project Scenario

Pecos Company acquired $100$ percent of Suaro's outstanding stock for $$1,450,000$ cash on January $1,2023,$ when Suaro had the

following balance sheet:At the acquisition date, the fair values of each identifiable asset and liability that differed from book value were as follows:

Land

$$80,000$

Brand name

$60,000($indefinite life$-$unrecognized on Suaro's books$)$

Software

$415,000(2-$year estimated remaining useful life$)$

In$-$process R&D

$300,000$

Additional Information

Although at acquisition date Pecos expected future benefits from Suaro's in$-$process research and development $($R&D$),$ by the end of $2023$ it became clear that the research project was a failure with no future economic benefits.

During $2023,$ Suaro earns $$75,000$ and pays no dividends.

Selected amounts from Pecos's and Suaro's separate financial statements at December $31,2024,$ are presented in the consolidated information worksheet. All consolidated worksheets are to be prepared as of December $31,2024,$ two years subsequent to acquisition.

Pecos's January $1,2024,$ Retained Earnings balance$-$before any effect from Suaro's $2023$ income$-$is $$(930,000)($credit balance$).$

Pecos has $500,000$ common shares outstanding for EPS calculations and reported $$2,943,100$ for consolidated assets at the beginning of the period.

The following is the consolidated information worksheet:

Page $157$

$\backslash$table$[[,$A$,$B$,$C$,$D$],[1,\backslash$table$[[$December $31,2024,$ trial$],[$balances$]],,,],[2,,$Pecos,Suaro,$],[3,,$$$(1,052,000),$$$(427,000),],[4,$Revenues,$821,000,262,000,],[5,$Operating expenses,?,?,$],[6,$Goodwill impairment loss,?,,$],[7,$Income of Suaro,?$(165,000),,],[8,$Net income,,,$],[9,,,,]]\backslash$table$[[10,$Retained earnings$-$Pecos $1/1/24,?,,],[11,$Retained earnings$-$Suaro $1/1/24,,(201,000),],[12,$Net income $($above$),?,(165,000),],[13,$Dividends declared,$200,000,35,000,],[14,$Retained earnings, $12/31/24,?,$$$(331,000),],[15],[16,$Cash,$195,000,95,000,],[17,$Receivables,$247,000,143,000,],[18,$Inventory,$415,000,197,000,],[19,$Investment in Suaro,?,,$],[20],[21],[22],[23,$Land,$341,000,85,000,],[24,$Equipment $($net$),240,100,100,000,],[25,$Software,,$312,000,],[26,$Other intangibles,$145,000,,],[27,$Goodwill,,,$],[28,$Total assets,?,$$932,000,],[29],[30,$Liabilities,$(1,537,100),(251,000),],[31,$Common stock,$(500,000),(350,000),],[32,$Retained earnings $($above$),?,(331,000),],[33,$Total liabilities and equity,?,$$(932,000),],[34],[35,$Fair$-$value allocation schedule,,,$],[36,$Price paid,$1,450,000,,],[37,$Book value,$476,000,,],[38,$Excess initial value,$974,000,$Amortizations,$],[39,$to land,$(10,000),2020,2021],[40,$to brand name,$60,000,?,?],[41,$to software,$100,000,?,?],[42,$to tabs as follows:

$$ Tab $1$ Consolidated Information Worksheet

$$ Tab $2$ Equity Method

$$ Tab $3$ Partial Equity Method

$$ Tab $4$ Initial Value Method