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On January $1,2019,$ Aspen Company acquired $80$ percent of Birch Company's voting stock for $$504,000.$ Birch reported a $$510,000$ book value, and the fair value of the noncontrolling interest was $$126,000$ on that date. Then, on January $1,2020,$ Birch acquired $80$ percent of Cedar Company for $$160,000$ when Cedar had a $$164,000$ book value and the $20$ percent noncontrolling interest was valued at $$40,000.$ In each acquisition, the subsidiary's excess acquisition$-$date fair over book value was assigned to a trade name with a $30-$year remaining life.

These companies report the following financial information. Investment income figures are not included.

$201920202021$

Sales:

Aspen Company $ $515,000$ $ $595,000$ $ $740,000$

Birch Company $285,000398,750631,000$

Cedar Company Not available $249,800258,800$

Expenses:

Aspen Company $ $397,500$ $ $442,500$ $ $530,000$

Birch Company $237,000315,000557,500$

Cedar Company Not available $233,000216,000$

Dividends declared:

Aspen Company $ $20,000$ $ $45,000$ $ $55,000$

Birch Company $10,00015,00015,000$

Cedar Company Not available $2,0006,000$

Assume that each of the following questions is independent:

If all companies use the equity method for internal reporting purposes, what is the December $31,2020,$ balance in Aspen's Investment in Birch Company account?

What is the consolidated net income for this business combination for $2021?$

What is the net income attributable to the noncontrolling interest in $2021?$

Assume that Birch made intra$-$entity inventory transfers to Aspen that have resulted in the following intra$-$entity gross profits in inventory at the end of each year:

Date Amount

$12/31/19$ $$11,100$

$12/31/2020,700$

$12/31/2128,400$

What is the accrual$-$based net income of Birch in $2020$ and $2021,$ respectively?

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