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Kelly acquired all of Constance's common stock on Jan 1 2017, in exchange for cash of $970,000. On that day, Constance reported common stock of 170,000 and retained earnings of $400,000. At the acquisition date, $90,000 of the fair value price was attributed to undervalued land while $150,000 was assigned to undervalued equipment having a 10-year remaining life. The $160,000 unallocated portion of the acquisition date excess fair value over book value was viewed as goodwill. The following are individual financial statement for the year ending December 31, 2021. On that date, Constance owes Kelly $10,000. Credits are in parentheses. Revenues Cost of goods sold Depreciation expense Equity in income of Constance Net income Kelly 12/31/2021 (1,175,000) 550,000 172,000 (125,000) (578,000) Constance 12/31/2021 (360,000) 90,000 130,000 (140,000) Retained earnings, 1/1/21 (1,417,000) (620,000) Net income (578,000) Dividends declared Retained earnings, 12/31/21 310,000 (1,685,000) (140,000) 110,000 (650,000) 318,000 Current assets Investment in Constance Land Buildings (net) Equipment (net) Goodwill Total assets 238,000 1,145,000 440,000 304,000 648,000 165,000 419.000 286,000 2,775,000 1,188,000 Liabilities (840,000) (368,000) Common stock (250,000) (170,000) Retained earnings (1,685,000) (650,000) Total liabilities and equity $(2,775,000) $(1,188,000) What method of investment has Kelly been using for this investment? b. How was Equity Income in Constance calculated for the reporting period of 2021? Determine and show the calculation of how investment balance at 12/31/2021 was derived? d. Show the worksheet adjustment entries (S, A, L, E, D, or P) for consolidation for 12/31/2021? Kelly acquired all of Constance's common stock on Jan 1 2017, in exchange for cash of $970,000. On that day, Constance reported common stock of 170,000 and retained earnings of $400,000. At the acquisition date, $90,000 of the fair value price was attributed to undervalued land while $150,000 was assigned to undervalued equipment having a 10-year remaining life. The $160,000 unallocated portion of the acquisition date excess fair value over book value was viewed as goodwill. The following are individual financial statement for the year ending December 31, 2021. On that date, Constance owes Kelly $10,000. Credits are in parentheses. Revenues Cost of goods sold Depreciation expense Equity in income of Constance Net income Kelly 12/31/2021 (1,175,000) 550,000 172,000 (125,000) (578,000) Constance 12/31/2021 (360,000) 90,000 130,000 (140,000) Retained earnings, 1/1/21 (1,417,000) (620,000) Net income (578,000) Dividends declared Retained earnings, 12/31/21 310,000 (1,685,000) (140,000) 110,000 (650,000) 318,000 Current assets Investment in Constance Land Buildings (net) Equipment (net) Goodwill Total assets 238,000 1,145,000 440,000 304,000 648,000 165,000 419.000 286,000 2,775,000 1,188,000 Liabilities (840,000) (368,000) Common stock (250,000) (170,000) Retained earnings (1,685,000) (650,000) Total liabilities and equity $(2,775,000) $(1,188,000) What method of investment has Kelly been using for this investment? b. How was Equity Income in Constance calculated for the reporting period of 2021? Determine and show the calculation of how investment balance at 12/31/2021 was derived? d. Show the worksheet adjustment entries (S, A, L, E, D, or P) for consolidation for 12/31/2021

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