On December 31, Year 3, Mueller Corp. acquired 80% of the outstanding shares of Wilson Inc....

  

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On December 31, Year 3, Mueller Corp. acquired 80% of the outstanding shares of Wilson Inc. for a total cost of $240,000. The carrying amount of Wilson's assets, liabilities, and equity was equal to fair value except for the following: Inventory Equipment, net Patent Long-term debt Common shares Retained earnings Carrying Amount $ 60,000 270,000 180,000 175,000 42,000 Dividend income Net income Common shares Retained earnings Fair Value $ 68,000 276,000 40,000 160,000 As at December 31, Year 3, the equipment and patent had an estimated useful life of six and eight years, respectively. The long-term debt is due on January 1, Year 9. There was a goodwill impairment loss of $3,000 in Year 5. There were no other impairment losses. Mueller uses the cost method to account for its investment in Wilson. The book values of selected accounts for the year ended December 31, Year 7 were as follows: Mueller $ 12,000 62,000 100,000 250,000 ? ? Wilson $ 26,000 175,000 110,000 Required: (a) Prepare a schedule of changes to the acquisition differential for the four year period ending December 31, Year 7. (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response. Negative/Deductible amounts should be indicated by a minus sign.) Inventory Equipment (6 years) Patents (8 years) Long-term debt (5 years) Goodwill Balance Dec. 1 Year 3 $ Changes Year 4, 5&6 $ Consolidated net income attributable to the parent Consolidated retained earnings Non-controlling interest Year 7 $ (b) Calculate consolidated net income attributable to the parent, ending retained earnings and non-controlling interest at December 31, Year 7. (Omit $ sign in your response.) Balance Dec. 31 Year 7 LA LA LA On December 31, Year 3, Mueller Corp. acquired 80% of the outstanding shares of Wilson Inc. for a total cost of $240,000. The carrying amount of Wilson's assets, liabilities, and equity was equal to fair value except for the following: Inventory Equipment, net Patent Long-term debt Common shares Retained earnings Carrying Amount $ 60,000 270,000 180,000 175,000 42,000 Dividend income Net income Common shares Retained earnings Fair Value $ 68,000 276,000 40,000 160,000 As at December 31, Year 3, the equipment and patent had an estimated useful life of six and eight years, respectively. The long-term debt is due on January 1, Year 9. There was a goodwill impairment loss of $3,000 in Year 5. There were no other impairment losses. Mueller uses the cost method to account for its investment in Wilson. The book values of selected accounts for the year ended December 31, Year 7 were as follows: Mueller $ 12,000 62,000 100,000 250,000 ? ? Wilson $ 26,000 175,000 110,000 Required: (a) Prepare a schedule of changes to the acquisition differential for the four year period ending December 31, Year 7. (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response. Negative/Deductible amounts should be indicated by a minus sign.) Inventory Equipment (6 years) Patents (8 years) Long-term debt (5 years) Goodwill Balance Dec. 1 Year 3 $ Changes Year 4, 5&6 $ Consolidated net income attributable to the parent Consolidated retained earnings Non-controlling interest Year 7 $ (b) Calculate consolidated net income attributable to the parent, ending retained earnings and non-controlling interest at December 31, Year 7. (Omit $ sign in your response.) Balance Dec. 31 Year 7 LA LA LA

Answer rating: 100% (QA)

a Schedule of Changes to the Acquisition Differential for the four year period ending December 31 Year 7 Balance Dec 1 Year 3 Year 4 56 Changes Year 7 Balance Dec 31 Year 7 Inventory 60000 8000 0 0 68... View the full answer