You will be creating and entering formulas to complete four worksheets . The first objective is to demonstrate the effect of differentmethods of accounting for the investments ( equity , initial value , and partial equity ) on the parent companys trial balance and on theconsolidated worksheet subsequent to acquisition . The second objective is to show the effect on consolidated balances and key financialratios of recognizing a good will impairment loss. The project requires preparation of the following four separate worksheets: a. Consolidated information worksheet (follows)

b. Equity method consolidation worksheet

c. Initial value method consolidation worksheet

d. Partial equity method consolidation worksheet In formulating your solution , each worksheet should link directly to the first worksheet .

Additional information: Although at acquisition date Pecos expected future benefits from Suaro's in-process research and development (R&D) , by the end of 2020 it became clear that the research project was a failure with no future economic benefits.

1. During 2020 , Suaro earns $ 75,000 and pays no dividend. 2. Selected amounts from Pecos's and Suaro's separate financial statements at December 31 , 2021 , are presented in the consolidatednformation worksheet . All consolidated worksheets are to be prepared as of December 31 , 2021 , two years subsequent to acquisition. 3. Pecos's January 1 , 2021 , Retained Earnings balance-before any effect from Suaro's 2020 income-is $ ( 930 , 000 ) ( credit balance. 4.Pecos has 500,000 common shares outstanding for EPS calculations and reported $ 2,943 , 100 for consolidated assets at the beginning ofthe period.

The following is the consolidated information worksheet:

Complete the four worksheets as follows:

1.Input the consolidated information worksheet provided and complete the fair-vallation schedule by computing the excesamortizations for 2020 and 2021. 2 . Using separate worksheets , prepare Pecos's trial balances for each of the indicated accounting methods ( equity , initial value , and partiequity ) . Use only formulas for the Investment in Suaro , the Income of Suaro , and Retained Earnings accounts. 3 . Using references to other cells only ( either from the consolidated information worksheet or from the separate method sheets ) , preparefor each of the three consolidation worksheets.

Pecos Company acquired 100 percent of Suaro's outstanding stock for $1,450,000 cash on January 1 , 2020, when Suaro had the following balance sheet: December 31, 2021, trial balances Revenues Operating expenses Pecos Suaro Goodwill impairment loss Income of Suaro Net income Retained earnings-Pecos 1/1/21 Retained earnings-Suaro 1/1/21 Net income (above) Dividends declared Retained earnings 12/31/21 Cash Receivables Inventory Investment in Suaro Land Equipment (net) $(1,052,000) $(427,000) 821,000 262,000 Software Other intangibles ? Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity Fair-value allocation schedule Price paid Book value Excess initial value to land to brand name to software to IPR\&D to goodwill Suaro's RE changes 2020 2021 ? ? $(165,000) ? ? (201,000) (165,000) 35,000 $$(331,000) 195,000 95,000 247,000 143,000 197,000 ? 341,000 85,000 240,100 100,000 312,000 145,000 145,000 ? $932,000 (1,537,100) (251,000) (500,000) (350,000) ? (331,000) ? $(932,000) Amortizations (10,000) 2020 2021 60,000 ? ? 100,000 ? ? ? ? ? ? Pecos Company acquired 100 percent of Suaro's outstanding stock for $1,450,000 cash on January 1 , 2020, when Suaro had the following balance sheet: December 31, 2021, trial balances Revenues Operating expenses Pecos Suaro Goodwill impairment loss Income of Suaro Net income Retained earnings-Pecos 1/1/21 Retained earnings-Suaro 1/1/21 Net income (above) Dividends declared Retained earnings 12/31/21 Cash Receivables Inventory Investment in Suaro Land Equipment (net) $(1,052,000) $(427,000) 821,000 262,000 Software Other intangibles ? Goodwill Total assets Liabilities Common stock Retained earnings (above) Total liabilities and equity Fair-value allocation schedule Price paid Book value Excess initial value to land to brand name to software to IPR\&D to goodwill Suaro's RE changes 2020 2021 ? ? $(165,000) ? ? (201,000) (165,000) 35,000 $$(331,000) 195,000 95,000 247,000 143,000 197,000 ? 341,000 85,000 240,100 100,000 312,000 145,000 145,000 ? $932,000 (1,537,100) (251,000) (500,000) (350,000) ? (331,000) ? $(932,000) Amortizations (10,000) 2020 2021 60,000 ? ? 100,000