On January 1, 2012, Push Company purchased an 80% interest in the capital stock of Way-Down Company for $820,000. At that time, WayDown Company had capital stock of $500,000 and retained earnings of $100,000. Differences between the fair value and the book value of identifiable assets of WayDown Company were as follows:

Fair Value in Excess of Book Value

Equipment..............................$125,000

Land........................................62,500

Inventory...................................37,500

The book values of all other assets and liabilities of WayDown Company were equal to their fair values on January 1, 2012. The equipment had a remaining life of five years on January 1, 2012. The inventory was sold in 2012. WayDown Company revalued its assets on January 2, 2012. New values were allocated on the basis of the fair value onWayDown Company as a whole imputed from the transaction.

Financial data for 2012 are presented here:

Required:
A. In general journal form, prepare the entry made by WayDown Company on January 2, 2012, to record the effect of the pushed down values implied by the purchase of its stock by Push Company assuming that values were allocated on the basis of the fair value of WayDown Company as a whole imputed from the transaction.
B. Prepare a consolidated financial statements workpaper for the year ended December 31, 2012.
C. What effect does the decision to apply the full push down approach have on the following items (compared to the case where push down accounting is not used):
1. Consolidated net income?
2. Consolidated retained earnings?
3. Consolidated net assets?
4. Noncontrolling interest in consolidated net assets?

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Push Company WayDown Company Sales Dividend income $1,050,000 400,000 sold Depreciation expense Other expenses Total cost and expense $ 140,000 $ 120,000 1/1 Retained earnings $ 102,500 Dividends declared 12/31 Retained earnings Cash Accounts receivable Inventory Investment in Way Down Goodwill Land Plant and equipment 250,000 230,000 820,000 S 35,000 170,000 150,000 200,000 362,500 300,000 S1,217,500 0,000 $1,730,000 Total assets 160,000 50,000 1,000,000 Accounts payable Notes payable Capital stock Revaluation capital Retained earnings $ 100,000 20,000 500,000 425,000 172,500 S1,217,500 520,000 $1,730,000 Total lities and equity