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: Item Cash Current Receivables $ $ Private Manufacturing Debit Credit 39,500 112,500 301,000 1,240,631 984, 121 Secret Corporation Debit Credit 29,000 85,100 348,900 Inventory 1,231,000 2,750,000 2,009,000 195,000 643,000 50,000 200,000 513,000 1,835,000 430,000 85,000 205,874 40,000 $ 619,000 Investment in Secret Stock Investment in Secret Bonds Investment in Private Bonds Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings, January 1 Sales Other Income Income from Secret Corp. Total $1,210,000 98,000 200,000 1,000,000 79,000 4,268 500,000 1,000,000 700,000 3,027,695 3,101,000 134, 121 84,936 $9,555, 752 280,000 468, 606 790,000 31,000 $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, Private's 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. a. Compute the amount of the goodwill as of January 1, 20X7. Goodwill at acquisition b. Compute the balance of Private's Investment in Secret Stock account as of January 1, 20X7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Balance in Investment c. Compute the gain or loss on the constructive retirement of Secret's bonds that should appear in the 20x7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) on constructive retirement d. Compute the income that should be assigned to the noncontrolling interest in the 20x7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Income to noncontrolling interest e. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Total noncontrolling interest f. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) view transaction list Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 1 g. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20x7. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PRIVATE MANUFACTURING COMPANY AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X7 Consolidation Entries Private Secret DR CR Consolidated Co. Corp. Income Statement Sales Other Income Less: COGS Less: Depr. & Amort. Expense Less: Other Expenses Goodwill Impairment Loss Gain on Bond Retirement Income from Secret Corp. Consolidated Net Income NCI in Net Income Controlling Interest in NI Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Assets Cash Current Receivables Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Secret Stock Investment in Secret Bonds Investment in Private Bonds Goodwill Total Assets Liabilities & Equity Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings 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: Item Cash Current Receivables $ $ Private Manufacturing Debit Credit 39,500 112,500 301,000 1,240,631 984, 121 Secret Corporation Debit Credit 29,000 85,100 348,900 Inventory 1,231,000 2,750,000 2,009,000 195,000 643,000 50,000 200,000 513,000 1,835,000 430,000 85,000 205,874 40,000 $ 619,000 Investment in Secret Stock Investment in Secret Bonds Investment in Private Bonds Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings, January 1 Sales Other Income Income from Secret Corp. Total $1,210,000 98,000 200,000 1,000,000 79,000 4,268 500,000 1,000,000 700,000 3,027,695 3,101,000 134, 121 84,936 $9,555, 752 280,000 468, 606 790,000 31,000 $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, Private's 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. a. Compute the amount of the goodwill as of January 1, 20X7. Goodwill at acquisition b. Compute the balance of Private's Investment in Secret Stock account as of January 1, 20X7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Balance in Investment c. Compute the gain or loss on the constructive retirement of Secret's bonds that should appear in the 20x7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) on constructive retirement d. Compute the income that should be assigned to the noncontrolling interest in the 20x7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Income to noncontrolling interest e. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Total noncontrolling interest f. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) view transaction list Consolidation Worksheet Entries Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit 1 g. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20x7. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PRIVATE MANUFACTURING COMPANY AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X7 Consolidation Entries Private Secret DR CR Consolidated Co. Corp. Income Statement Sales Other Income Less: COGS Less: Depr. & Amort. Expense Less: Other Expenses Goodwill Impairment Loss Gain on Bond Retirement Income from Secret Corp. Consolidated Net Income NCI in Net Income Controlling Interest in NI Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Assets Cash Current Receivables Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Secret Stock Investment in Secret Bonds Investment in Private Bonds Goodwill Total Assets Liabilities & Equity Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings