Private Manufacturing Company acquired 90 percent of Secret Corporations outstanding common stock on December 31, 20X5, for $1,152,000. At that date, the fair value of the noncontrolling interest was $128,000, and Secret reported common stock outstanding of $500,000, premium on common stock of $280,000, and retained earnings of $420,000. The book values and fair values of Secrets assets and liabilities were equal except for land, which was worth $30,000 more than its book value. On April 1, 20X6, Private issued at par $200,000 of 10 percent bonds directly to Secret; interest on the bonds is payable March 31 and September 30. On January 1, 20X7, Private purchased all of Secrets outstanding 10-year 12 percent bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 1, 20X1, for 101. Interest on the bonds is payable December 31 and June 30. Since the date it was acquired by Private Manufacturing, Secret has sold inventory to Private on a regular basis. The amount of such intercompany sales totaled $64,000 in 20X6 and $78,000 in 20X7, including a 30 percent gross profit. All inventory transferred in 20X6 had been resold by December 31, 20X6, except inventory for which Private had paid $15,000 and did not resell until January 20X7. All inventory transferred in 20X7 had been resold at December 31, 20X7, except merchandise for which Private had paid $18,000. At December 31, 20X7, trial balances for Private and Secret appeared as follows:

	Private Manufacturing										Secret Corporation
Item	Debit					Credit					Debit					Credit
Cash		$	39,500									$	29,000
Current Receivables			112,500										85,100
Inventory			301,000										348,900
Investment in Secret Stock			1,240,631
Investment in Secret Bonds			984,121
Investment in Private Bonds													200,000
Land			1,231,000										513,000
Buildings & Equipment			2,750,000										1,835,000
Cost of Goods Sold			2,009,000										430,000
Depreciation & Amortization			195,000										85,000
Other Expenses			643,000										205,874
Dividends Declared			50,000										40,000
Accumulated Depreciation							$	1,210,000									$	619,000
Current Payables								98,000										79,000
Bonds Payable								200,000										1,000,000
Premium on Bonds Payable																		4,268
Common Stock								1,000,000										500,000
Premium on Common Stock								700,000										280,000
Retained Earnings, January 1								3,027,695										468,606
Sales								3,101,000										790,000
Other Income								134,121										31,000
Income from Secret Corp.								84,936
Total		$	9,555,752				$	9,555,752				$	3,771,874				$	3,771,874

As of December 31, 20X7, Secret had declared but not yet paid its fourth-quarter dividend of $10,000. Both Private and Secret use the effective interest method for the amortization of bond discount and premium. On December 31, 20X7, Privates management reviewed the amount attributed to goodwill as a result of its purchase of Secret common stock and concluded that an impairment loss in the amount of $25,000 had occurred during 20X7 and should be shared proportionately between the controlling and noncontrolling interests. Private uses the fully adjusted equity method to account for its investment in Secret. Required: a. Compute the amount of the goodwill as of January 1, 20X7.

b. Compute the balance of Privates Investment in Secret Stock account as of January 1, 20X7.

c. Compute the gain or loss on the constructive retirement of Secrets bonds that should appear in the 20X7 consolidated income statement.

d. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated income statement.

e. Compute the total noncontrolling interest as of December 31, 20X6.

f. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X7.

Record the basic consolidation entry.

Record the amortized excess value differential entry.

Record the excess value (differential) reclassification entry.

Record the reversal of last year's deferral.

Record the deferral of the 20X7 unrealized profits on the inventory transfer.

Record the elimination of the intercompany holdings of Private's bonds.

Record the entry to eliminate the accrued interest on the intercompany bonds.

Record the entry to eliminate the intercompany interest receivables/payables.

Record the entry to eliminate the intercompany holdings of Secret's bonds.

Record the entry to eliminate the intercompany dividend payable/receivable.