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Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest and AAP Assume, on January 1, 2015, a parent company acquired a 90% interest in its subsidiary. The total fair value of the controlling and noncontrolling interest was $500,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: 90% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2019: b. Calculate and organize the profits and losses on intercompany transactions and balances. (No intercompany transactions) c. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Equity investment account at 1/1/19 } \\ \hline p\% book value of subsidiary's net assets & 540000 \\ \hline Unamortized p\% AAP & 302400 \\ \hline & 842400 \\ \hline \multicolumn{1}{|c|}{ Equity investment account at 12/31/19 } \\ \hline \hline p\% book value of subsidiary's net assets & $675000 \\ \hline Unamortized p\% AAP & 265500 \\ \hline & 940500 \\ \hline \end{tabular} d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. \begin{tabular}{|r|r|} \hline \multicolumn{2}{|c|}{ Equity Investment } \\ \hline 0 & 0 \\ \hline 0 & 0 \\ \hline 0 & 0 \\ \hline \end{tabular} f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Note:Use a negative sign with your answer to indicate a reduction to net income. g. Complete the complete the consolidation worksheet. Note: Use negative signs with your answers in the Consolidated column when appropriate (Cost of goods sold, Operating expenses and Dividends). \begin{tabular}{|l|r|r|} \hline \hline Current liabilities & $800,000 & $320,000 \\ \hline Long-term liabilities & 1,600,000 & 400,000 \\ \hline Common stock & 160,000 & 80,000 \\ \hline APIC & 720,000 & 120,000 \\ \hline Retained earnings & 2,012,500 & 550,000 \\ \hline Noncontrolling interest & & \\ \hline & & \\ \hline & & \\ \hline & $5,292,500 & $1,470,000 \\ \hline \hline \end{tabular} Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest and AAP Assume, on January 1, 2015, a parent company acquired a 90% interest in its subsidiary. The total fair value of the controlling and noncontrolling interest was $500,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets: 90% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following pre-consolidation financial statements at December 31, 2019: b. Calculate and organize the profits and losses on intercompany transactions and balances. (No intercompany transactions) c. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Equity investment account at 1/1/19 } \\ \hline p\% book value of subsidiary's net assets & 540000 \\ \hline Unamortized p\% AAP & 302400 \\ \hline & 842400 \\ \hline \multicolumn{1}{|c|}{ Equity investment account at 12/31/19 } \\ \hline \hline p\% book value of subsidiary's net assets & $675000 \\ \hline Unamortized p\% AAP & 265500 \\ \hline & 940500 \\ \hline \end{tabular} d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. \begin{tabular}{|r|r|} \hline \multicolumn{2}{|c|}{ Equity Investment } \\ \hline 0 & 0 \\ \hline 0 & 0 \\ \hline 0 & 0 \\ \hline \end{tabular} f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Note:Use a negative sign with your answer to indicate a reduction to net income. g. Complete the complete the consolidation worksheet. Note: Use negative signs with your answers in the Consolidated column when appropriate (Cost of goods sold, Operating expenses and Dividends). \begin{tabular}{|l|r|r|} \hline \hline Current liabilities & $800,000 & $320,000 \\ \hline Long-term liabilities & 1,600,000 & 400,000 \\ \hline Common stock & 160,000 & 80,000 \\ \hline APIC & 720,000 & 120,000 \\ \hline Retained earnings & 2,012,500 & 550,000 \\ \hline Noncontrolling interest & & \\ \hline & & \\ \hline & & \\ \hline & $5,292,500 & $1,470,000 \\ \hline \hline \end{tabular}

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