Parent Corp. purchased 80% of the outstanding shares of Subsidiary Corp. on January 1, 20X1, for $800,000. The Statement of Financial Position (SFP) of Subsidiary Corp. and the fair values of the different accounts are provided below.

The buildings are being depreciated using straight-line depreciation and had a future life of five years on the date of acquisition. All current assets and liabilities turned over by the end of 20X1. The separate-entity financial statements of Parent Corp. and Subsidiary Corp. for 20X2 are provided on the following two pages.

Additional information:

–  Subsidiary Corp. sold goods worth $300,000 at a gross profit of 25% to Parent Corp. in 20X0 (the year before 20X1). All of these goods remained unsold in Parent Corp.€™s ending inventory at the end of 20X0. Half of these goods were sold in 20X1, and the remaining half were sold in 20X2 to outsiders by Parent Corp.

–  Subsidiary Corp. sold goods worth $250,000 at a gross profit of 30% to Parent Corp. in 20X1. One-third of these goods remained unsold with Parent Corp. at the end of 20X1. Parent Corp. sold goods worth $300,000 at a gross profit of 25% to Subsidiary Corp. in 20X1. Half of these goods remained unsold with Subsidiary Corp. at the end of 20X1.

–  Subsidiary Corp. sold goods worth $200,000 at a gross profit of 30% to Parent Corp. in 20X2. Half of these goods remained unsold with Parent Corp. at the end of 20X2. Parent Corp. sold goods worth $350,000 at a gross profit of 25% to Subsidiary Corp. in 20X2; 40% of these goods remained unsold with Subsidiary Corp. at the end of 20X2.

–  Subsidiary Corp. sold all of its investments in 20X2 to Parent Corp. for $145,000.

Required

a. Show the purchase price allocation calculations required at the time of acquisition and the goodwill and NCI balances at the time of acquisition.

b. Show all necessary consolidation adjustments required in 20X2 relating to 20X1 and 20X2 (i.e., show the remaining adjustments other than the acquisition-related adjustments required in the previous bullet, necessary under the MEAR steps).

c. Calculate the NCI balance at the end of 20X1.

d. Calculate the consolidated retained earnings balance at the end of 20X1.

e. Calculate the adjusted income of Subsidiary Corp. and the adjusted income of Parent Corp. for 20X2.

f. Calculate the consolidated income in 20X2.

g. Calculate the NCI€™s share of the consolidated income in 20X2.

h. Calculate Parent Corp.€™s share of the consolidated income in 20X2.

i. Calculate the consolidated retained earnings balance at the end of 20X2.

j. Calculate the NCI balance at the end of 20X2.

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Subsidiary Co. Statement of Financial Position as of January 1, 20X1 Fair value $ 250,000 Carrying value $ 250,000 Cash Accounts receivable 150,000 150,000 Inventory Land & buildings Less accumulated depreciation Investments 175,000 250,000 550,000 550,000 (250,000) 115,000 150,000 Goodwill 160,000 TOTAL ASSETS $1,150,000 $1,350,000 $ 225,000 $ 200,000 Accounts payable Long-term debt 325,000 325,000 Shareholders' equity Contributed capital 450,000 Retained earnings 150,000 $ 525,000 TOTAL LIABILITIES & OWNERS' EQUITY $1,150,000 Parent Corp. Statement of Financial Position as of December 31, 20X2 Cash $1,135,000 Accounts receivable 100,000 Inventory Land & buildings Less accumulated depreciation 300,000 650,000 (580,000) Investments 145,000 Investment in subsidiary 800,000 Goodwill 250,000 $2,800,000 TOTAL ASSETS Accounts payable $ 350,000 Long-term debt 750,000 Shareholders' equity Contributed capital 550,000 Retained earnings 1,150,000 TOTAL LIABILITIES & OWNERS' EQUITY $2,800,000