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Alpha Corporation acquired 75% of Beta Corporations common stock for $20,100,000 on January 2, 2015. The estimated fair value of the noncontrolling interest was $5,900,000. Betas book value at the date of acquisition was $10,000,000, and its identifiable net assets were fairly stated except for previously unreported completed technology, valued at $4,000,000, with a remaining life of 5 years, straight-line. It is now December 31, 2018, and you are preparing consolidated financial statements for Alpha and Beta. Following is information on intercompany transactions:

1. On January 2, 2016, Alpha sold equipment to Beta for $6 million and recorded a gain of $2 million. The equipment had a remaining life of 10 years at that time.
2. Beta supplies Alpha with component parts for its products, at a markup of 20% on cost. During 2018, Beta made sales totaling $20 million to Alpha. Alpha had parts purchased for $1.8 million and $4 million in its 2018 beginning and ending inventory balances, respectively (Hint: $1.8 million is the unsold inventory from last year and $4 is the unsold inventory of this year).
3. Alpha sells materials to Beta for use in its manufacturing processes, with a 20% gross profit ratio. During 2018, Alpha made sales totaling $15 million to Beta. Beta had materials purchased for $3 million and $2.8 million in its 2018 beginning and ending inventory balances, respectively. (Hint: $3 million is the unsold inventory from last year and $2.8 is the unsold inventory of this year).

Goodwill arising from this acquisition was impaired by a total of $3 million during the years 2015-2017, and no further goodwill impairment occurred in 2018. The separate December 31, 2018 trial balances of Alpha and Beta appear below, before Alphas end-year adjustment to record its equity in Betas income for 2018.

Balance Sheet at December 31, 2018 Alpha Beta Cash 1,000 2,500 A/R, net 5,600 10,000 Inventories 70,000 30,000 Plant and Equipment, net 460,000 150,000 Investment in Beta 20,225 Total Assets 556,825 192,500 Current Liabilities 4,000 2,800 Long-term debt 489,825 163,700 Capital Stocks 5,000 2,000 Retained earnings, January 1 90,000 20,000 Dividend (40,000) (3,000) Net Income 8,000 7,000 Total equities 556,825 192,500

Income Statement 2018 Alpha Beta Sales 150,000 50,000 Cost of Sales (100,000) (35,000) Other Expenses (42,000) (8,000) Income from Beta Net Income 8,000 7,000

Required:

1. Determine the Goodwill assigned to Non-controlling interest at the acquisition date (2 points).
2. Determine the balance for the account Investment in Beta at December 31, 2018 after Alphas end-year adjustment to record its equity in Betas income for 2018 (Hint: Dividend adjustment is already included in the balance of investment). Show your calculations (3 points).
3. Determine the balance of the account Equity in Betas Income for the year 2018. Show your calculations (2 points).
4. Calculate the balance of NCI at December 31, 2018. Provide detail calculations of the three components of this balance (3 points).
5. Prepare consolidation adjustment entries (20 points).
6. Complete a consolidated worksheet for Alpha Corporation and its subsidiary Beta as of December 31, 2018.

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