Pace acquired Saber on January 1, 2 2013, attributing its $200 million excess of acquisition cost over book value to plant assets (10-year life), $160 million and to goodwill, $40 million. At that time Saber's stockholders' equity was $2,000 million. It is now December 31,2014, and consolidation entries are prepared. The investment account balance on January 1,2014 was $2,286 million. Saber reported net income of $130 million and paid dividends of $40 million in 2014. Saber paid dividends of $60 million in 2013. Goodwill is not impaired in either year.
Required
a. What was Saber's 2013 reported net income?
b. What was Saber's stockholders' equity on January 1,2014?
c. Calculate Pace's equity income accrual for 2014, using the complete equity method.
d. Prepare the eliminating entries needed to consolidate Pace and Saber at December 31,2014.
e. Assume it is now December 31,2025. Total goodwill impairment as of January 1,2025 is $30 million, and there is no impairment for 2025. Saber still owns the plant assets. Prepare consolidation eliminating entries (R) and (O) for 2025.