On January 1, 2010, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had Common Stock of $800,000 and Retained Earnings of $40,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $90,000. QuickPort attributed the $60,000 excess of NetSpeed€™s fair value over book value to a database with a 5-year remaining life. During the next two years, NetSpeed reported the following:

On July 1, 2010, QuickPort sold communication equipment to NetSpeed for $42,000. The equipment originally cost $48,000 and had accumulated depreciation of $9,000 and an estimated remaining life of three years at the date of the intra-entity transfer.
a. Compute the equity method balance in QuickPort€™s Investment in NetSpeed, Inc., account as of December 31, 2011.
b. Prepare the worksheet adjustments for the December 31, 2011, consolidation of QuickPort andNetSpeed.

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2010 2011 0 Income 80,000 115,000 Dividends $8,000 8,000