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On January 1, 2017. Pinnacle Corporation exchanged $3,570,500 cash for 100 percent of the outstanding voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet: S Cash Accounts receivable Inventory Buildings (net) Licensing agreements $ 101,000 336,000 414,000 1,910,000 3, 135,000 $ 5,896,000 Accounts payable Long-term debt Connon stock Retained earnings 391,000 2,750,000 1,500,000 1,255,000 $ 5,896,000 Pinnacle prepared the following fair value allocation $ Fair value of Strata (consideration transferred) Carrying out acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to g li indefinite life) 3,570, 500 2, 755,000 815,500 $ 492,000 (104.000) 388,000 $ 427.500 At the acquisition date, Strate's buildings had a 10-year remaining life and its licensing agreements were due to expire in 5 years. At December 31, 2018 Strata's accounts payable included an $88,200 current liability owed to Pinnacle Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial value method in its internal accounting for its investment in Strata The separate financial statements for the two companies for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses. Sales Pinnacle (7,757,000) $ Cost of goods sold Interest expense Depreciation expense mortization Expense Dividend Income Set income Betained earning 1/1/18 et income Dividends declared Betained termines 12/31/18 Strata (3,227.000) 1,745,000 190,000 414,000 627,000 $ $ $ 299,000 633,000 (50) (1.830,000) (5,200,000) (1.830,000) 500 (6.610,000) 242,800 1.100.000 1,430,00 3,570,00 5,910,000 (231,000) (3,537,400) (231.000) Cash S 45,000 S (1,723,400) accounts receivable Inventory Investment in Strata Buildings (net) Licensing agreements Goodwill Total assets 362.000 1.585.000 1.995, 1,301.00 442.5 $ 12.605,000 $ ,365.400 Ce were we w enye December 31, 2018. Strata's accounts payable included an $88,200 current liability owed to Pinnacle. Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial value method in its internal accounting for its investment in Strata The separate financial statements for the two companies for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses 5 $ Pinnacle (7,757,880) 5,040,000 299,000 633,000 Strata (3,227,000) 1,745,000 190,000 414 627,000 Sales Cost of goods sold Interest expense Depreciation expense Amortization expense Dividend Income Net Income Retained earnings 1/1/18 et income Divonds declared Retained Earnings 12/31/18 (5,200) $ (1,030,000) $ (5,200,000) (1. ,000) $ S $ (6,610,000) 202.000 1,100,000 1.41.000 3.5 . See (231.000) (1,537,400) (231.000 45,000 (1.723,400) 45,000 362, 1,585,00 Accounts receivable Inventory Investment in Strata ildings ( ) Licensing agreements Goodwill Total assets accounts 5,930, 1,995.000 1,881. $ 12.695,00 $ 6,368,00 3 . ) (2.60.00) (2.420.000) (1.000 ) (1,500,000) (6,610,000) (1,723,400) $ (12,695,000) $ (6,368,400) Betained earnings 12/31/18 Total L ities and OE Prepare a worksheet to consolidate the financial information for these two companies b. Compute the following amounts that would appear on Pinnacle's 2018 separate (nonconsolidated financial records Investment accounting was based on the equity method Subdary income Rendering Investmen t s Pinnacle's What efect does the parents internal investment accounting method have on its consolidated financial statements Complete this question by entering your answers in the tabs below. Required A Required B Required Prepare a worksheet to consolidate the financial information for these the companies. (For accounts where multiple consolidation entries are required, combine all debit tries to one amount and enter the amount in the debt column of the worksheet Sumaty combine all credit entries into one amount and enter the amount in the credit calms of the worksheet. Amounts in the Det and Crestone should be entered a positive. Negative amounts for the Consolidated Totals column should be entered Show less PINNACLE COMPANY AND SUBSIDIARY STRATA Conson Worksheet For Year December 31, 2011 Pinacle Debe Credit 07.757.000 eta 227 000 T500 190.000 34.000 21000 0.00 $ 1.500 520000 800.000 35618 2000 1.100 1.430.000 155 10000 Red . Prepare a worksheet to consolidate the financial Information for these two companies b. Compute the following amounts that would appear on Pinnacle's 2018 separate nonconsolidated) financial records of Pinnacle's Investment accounting was based on the equity method Subsidiary income Retained earnings. 1118 Investment in Strata c. What effect does the parent's internal Investment accounting method have on its consolidated financial statements? Complete this question by entering your answers in the tabs below. Required Required B Required Compute the following amounts that would appear on Pinnacle's 2016 desestment accounting was based on the method parate (nonconsolidated) Financial records if 1 Sub 2 W (R ed A Rec > Costock Betained warnings 12// Total Liabilities and (2,760.000) (1.00. ) 15,610,000) 1 (12,695, e) (2,420,000) (1.50 ) (1.723,00) (6.368. $ 4. Prepare a worksheet to consolidate the financial Information for these two companies B. Compute the following amounts that would appear on Pinnacle's 2018 separate (nonconsolidated financial records of Pinnacle's investment accounting was based on the equity method Subudiary income Retained earrings, 118 Investment in Strata c. W e does the parents memalinvestment accounting method have on its consolidated financial statements? Complete this question by entering your answers in the tabs below. RA ac ting method have on consolidated financial statements? Red On January 1, 2017. Pinnacle Corporation exchanged $3,570,500 cash for 100 percent of the outstanding voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet: S Cash Accounts receivable Inventory Buildings (net) Licensing agreements $ 101,000 336,000 414,000 1,910,000 3, 135,000 $ 5,896,000 Accounts payable Long-term debt Connon stock Retained earnings 391,000 2,750,000 1,500,000 1,255,000 $ 5,896,000 Pinnacle prepared the following fair value allocation $ Fair value of Strata (consideration transferred) Carrying out acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to g li indefinite life) 3,570, 500 2, 755,000 815,500 $ 492,000 (104.000) 388,000 $ 427.500 At the acquisition date, Strate's buildings had a 10-year remaining life and its licensing agreements were due to expire in 5 years. At December 31, 2018 Strata's accounts payable included an $88,200 current liability owed to Pinnacle Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial value method in its internal accounting for its investment in Strata The separate financial statements for the two companies for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses. Sales Pinnacle (7,757,000) $ Cost of goods sold Interest expense Depreciation expense mortization Expense Dividend Income Set income Betained earning 1/1/18 et income Dividends declared Betained termines 12/31/18 Strata (3,227.000) 1,745,000 190,000 414,000 627,000 $ $ $ 299,000 633,000 (50) (1.830,000) (5,200,000) (1.830,000) 500 (6.610,000) 242,800 1.100.000 1,430,00 3,570,00 5,910,000 (231,000) (3,537,400) (231.000) Cash S 45,000 S (1,723,400) accounts receivable Inventory Investment in Strata Buildings (net) Licensing agreements Goodwill Total assets 362.000 1.585.000 1.995, 1,301.00 442.5 $ 12.605,000 $ ,365.400 Ce were we w enye December 31, 2018. Strata's accounts payable included an $88,200 current liability owed to Pinnacle. Strata Corporation continues its separate legal existence as a wholly owned subsidiary of Pinnacle with independent accounting records. Pinnacle employs the initial value method in its internal accounting for its investment in Strata The separate financial statements for the two companies for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses 5 $ Pinnacle (7,757,880) 5,040,000 299,000 633,000 Strata (3,227,000) 1,745,000 190,000 414 627,000 Sales Cost of goods sold Interest expense Depreciation expense Amortization expense Dividend Income Net Income Retained earnings 1/1/18 et income Divonds declared Retained Earnings 12/31/18 (5,200) $ (1,030,000) $ (5,200,000) (1. ,000) $ S $ (6,610,000) 202.000 1,100,000 1.41.000 3.5 . See (231.000) (1,537,400) (231.000 45,000 (1.723,400) 45,000 362, 1,585,00 Accounts receivable Inventory Investment in Strata ildings ( ) Licensing agreements Goodwill Total assets accounts 5,930, 1,995.000 1,881. $ 12.695,00 $ 6,368,00 3 . ) (2.60.00) (2.420.000) (1.000 ) (1,500,000) (6,610,000) (1,723,400) $ (12,695,000) $ (6,368,400) Betained earnings 12/31/18 Total L ities and OE Prepare a worksheet to consolidate the financial information for these two companies b. Compute the following amounts that would appear on Pinnacle's 2018 separate (nonconsolidated financial records Investment accounting was based on the equity method Subdary income Rendering Investmen t s Pinnacle's What efect does the parents internal investment accounting method have on its consolidated financial statements Complete this question by entering your answers in the tabs below. Required A Required B Required Prepare a worksheet to consolidate the financial information for these the companies. (For accounts where multiple consolidation entries are required, combine all debit tries to one amount and enter the amount in the debt column of the worksheet Sumaty combine all credit entries into one amount and enter the amount in the credit calms of the worksheet. Amounts in the Det and Crestone should be entered a positive. Negative amounts for the Consolidated Totals column should be entered Show less PINNACLE COMPANY AND SUBSIDIARY STRATA Conson Worksheet For Year December 31, 2011 Pinacle Debe Credit 07.757.000 eta 227 000 T500 190.000 34.000 21000 0.00 $ 1.500 520000 800.000 35618 2000 1.100 1.430.000 155 10000 Red . Prepare a worksheet to consolidate the financial Information for these two companies b. Compute the following amounts that would appear on Pinnacle's 2018 separate nonconsolidated) financial records of Pinnacle's Investment accounting was based on the equity method Subsidiary income Retained earnings. 1118 Investment in Strata c. What effect does the parent's internal Investment accounting method have on its consolidated financial statements? Complete this question by entering your answers in the tabs below. Required Required B Required Compute the following amounts that would appear on Pinnacle's 2016 desestment accounting was based on the method parate (nonconsolidated) Financial records if 1 Sub 2 W (R ed A Rec > Costock Betained warnings 12// Total Liabilities and (2,760.000) (1.00. ) 15,610,000) 1 (12,695, e) (2,420,000) (1.50 ) (1.723,00) (6.368. $ 4. Prepare a worksheet to consolidate the financial Information for these two companies B. Compute the following amounts that would appear on Pinnacle's 2018 separate (nonconsolidated financial records of Pinnacle's investment accounting was based on the equity method Subudiary income Retained earrings, 118 Investment in Strata c. W e does the parents memalinvestment accounting method have on its consolidated financial statements? Complete this question by entering your answers in the tabs below. RA ac ting method have on consolidated financial statements? Red

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