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Consolidation subsequent to date of acquisition-Equity method with noncontrolling interest, AAP, and gain on upstream intercompany equipment sale A parent company acquired its 75% interest in its subsidiary on January 1, 2008. On the acquisition date, the total fair value of the controlling interest and the noncontrolling interest was $280,000 in excess of the book value of the subsidiary's Stockholders' Equity. All of that excess was allocated to a Royalty Agreement, which had a zero book value in the subsidiary's financial statements (i.e., there is no Goodwill). The Royalty Agreement has a 7 year estimated remaining economic life on the acquisition date. Both companies use straight line depreciation and amortization, with no salvage value. In January 2011, the subsidiary sold Equipment to the parent for a cash price of $260,000. The subsidiary acquired the equipment at a cost of $480000 and depreciated the equipment over its 10-year useful life using the straight-line method (no salvage value). The subsi

b. Calculate and organize the profits and lasses on intercompany sransactions and bulances. Consolidation subsequent to date of atequisition-Equity method with noncoentrolling interest, AkP, and gain on upstream intercompamy equipment sale equipment over itarmanng 4 year usedul ife. Folowing are fitancul statemens of the parent and its subsidary for the year ended Decenber 31,2012 . The parent uses the equity method to accicont for is fequity investmene: g. Complete the consolidating entries according to the C-E-A-D-I sequence. \begin{tabular}{|c|c|c|c|c|} \hline & & \begin{tabular}{l} Consolidation Worksheet \\ Description \end{tabular} & Debit & Credit \\ \hline \multirow[t]{5}{*}{ [C] } & Equity income & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline & Dividends & & 0 & 0 \\ \hline & Equity investment & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline \multirow[t]{5}{*}{ [E] } & Common stock & & 0 & 0 \\ \hline & APIC & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline & Equity investment & 1 & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline & Equity investment & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline \multirow[t]{2}{*}{ [D] } & & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline \multirow[t]{3}{*}{ [gain] } & Equity investment & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline \multirow[t]{2}{*}{ [Idep] } & & & 0 & 0 \\ \hline & & & 0 & 0 \\ \hline \end{tabular} f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Use negative signs with answers that are reductions. f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Use negative signs with answers that are reductions. c. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Use negative signs with answers that are deductions. d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation

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