A parent company acquired 80% of the stock of a subsidiary company on January 1, 2XX1,...

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A parent company acquired 80% of the stock of a subsidiary company on January 1, 2XX1, for $751,140. On this date, the balances of the subsidiary's stockholders' equity accounts were Common Stock, $468,000, and Retained Earnings, $93,600. On January 1, 2XX1, the market value for the 20% of shares not purchased by the parent was $184,860. On January 1, 2XX1, the subsidiary's recorded book values were equal to fair values for all items except four: (1) buildings and equipment, net had a book value of $195,000 and a fair value of $265,200, and (2) the licenses intangible asset had a book value of $136,500 and a fair value of $300,300. On the acquisition date, the subsidiary's buildings and equipment, net had a remaining useful life of 6 years and licenses had a remaining useful life of 7 years. On January 1, 2XX4, the parent sold a building to the subsidiary for $312,000. On this date, the building was carried on the parent's books (net of accumulated depreciation) at $253,500. Both companies estimated that the building has a remaining life of 6 years on the intercompany sale date, with no salvage value. Each company routinely sells merchandise to the other company, with a profit margin of 25 percent of selling price (regardless of the direction of the sale). During 2XX5, intercompany sales amount to $58,500, of which $31,200 of merchandise remains in the ending inventory of the parent. On December 31, 2XX5, $15,600 of these intercompany sales remained unpaid. Additionally, the subsidiary's December 31, 2XX4 inventory includes $46,800 of merchandise purchased in the preceding year from the parent. During 2XX4, intercompany sales amount to $78,000, and on December 31, 2XX4, $23,400 of these intercompany sales remained unpaid. The parent accounts for its Equity Investment in the subsidiary using the equity method. The pre-consolidation financial statements for the two companies for the year ended December 31, 2XX5, are provided below: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $1,950,000 $780,000 Cash $175,500 $97,500 Cost of goods sold (1,014,000) (499,200) Accounts receivable 210,600 187,200 Gross profit 936,000 280,800 Inventories 507,000 179,400 Depreciation & amort. expense (46,800) Operating expenses (604,500) (39,000) Buildings and equipment, net (148,200) Other assets 491,400 351,000 222,300 390,000 Interest expense (23,400) (7,800) Licenses 0 Total expenses (674,700) (195,000) Investment in subsidiary 914,940 39,000 0 Income (loss) from subsidiary Net income 55,770 $317,070 Total assets $2,521,740 $1,244,100 $85,800 Statement of retained earnings: Accounts payable $136,500 $58,500 Beginning retained earnings $1,046,370 $503,100 Notes payable 195,000 85,800 Net income 317,070 85,800 Other liabilities 85,800 101,400 Dividends declared (234,000) Ending retained earnings $1,129,440 (58,500) Common stock $530,400 Retained earnings 975,000 468,000 1,129,440 530,400 Required: Total liabilities and equity $2,521,740 $1,244,100 a. Compute the EOY noncontrolling interest equity balance $ 0 b. Prepare the consolidation income statement. Use negatives as appropriate. Note: Use negative signs with answers as appropriate. Consolidated Income Statement $ Sales Cost of Goods Sold Gross Profit Depreciation & Amort Expense Operating Expenses Interest Expense 0 0 0 0 0 0 Income (loss) from subsidiary 0 Consolidated Net Income 0 Consolidated NI attrib to NCI 0 $ Consolidated NI attrib to Cl 0 A parent company acquired 80% of the stock of a subsidiary company on January 1, 2XX1, for $751,140. On this date, the balances of the subsidiary's stockholders' equity accounts were Common Stock, $468,000, and Retained Earnings, $93,600. On January 1, 2XX1, the market value for the 20% of shares not purchased by the parent was $184,860. On January 1, 2XX1, the subsidiary's recorded book values were equal to fair values for all items except four: (1) buildings and equipment, net had a book value of $195,000 and a fair value of $265,200, and (2) the licenses intangible asset had a book value of $136,500 and a fair value of $300,300. On the acquisition date, the subsidiary's buildings and equipment, net had a remaining useful life of 6 years and licenses had a remaining useful life of 7 years. On January 1, 2XX4, the parent sold a building to the subsidiary for $312,000. On this date, the building was carried on the parent's books (net of accumulated depreciation) at $253,500. Both companies estimated that the building has a remaining life of 6 years on the intercompany sale date, with no salvage value. Each company routinely sells merchandise to the other company, with a profit margin of 25 percent of selling price (regardless of the direction of the sale). During 2XX5, intercompany sales amount to $58,500, of which $31,200 of merchandise remains in the ending inventory of the parent. On December 31, 2XX5, $15,600 of these intercompany sales remained unpaid. Additionally, the subsidiary's December 31, 2XX4 inventory includes $46,800 of merchandise purchased in the preceding year from the parent. During 2XX4, intercompany sales amount to $78,000, and on December 31, 2XX4, $23,400 of these intercompany sales remained unpaid. The parent accounts for its Equity Investment in the subsidiary using the equity method. The pre-consolidation financial statements for the two companies for the year ended December 31, 2XX5, are provided below: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $1,950,000 $780,000 Cash $175,500 $97,500 Cost of goods sold (1,014,000) (499,200) Accounts receivable 210,600 187,200 Gross profit 936,000 280,800 Inventories 507,000 179,400 Depreciation & amort. expense (46,800) Operating expenses (604,500) (39,000) Buildings and equipment, net (148,200) Other assets 491,400 351,000 222,300 390,000 Interest expense (23,400) (7,800) Licenses 0 Total expenses (674,700) (195,000) Investment in subsidiary 914,940 39,000 0 Income (loss) from subsidiary Net income 55,770 $317,070 Total assets $2,521,740 $1,244,100 $85,800 Statement of retained earnings: Accounts payable $136,500 $58,500 Beginning retained earnings $1,046,370 $503,100 Notes payable 195,000 85,800 Net income 317,070 85,800 Other liabilities 85,800 101,400 Dividends declared (234,000) Ending retained earnings $1,129,440 (58,500) Common stock $530,400 Retained earnings 975,000 468,000 1,129,440 530,400 Required: Total liabilities and equity $2,521,740 $1,244,100 a. Compute the EOY noncontrolling interest equity balance $ 0 b. Prepare the consolidation income statement. Use negatives as appropriate. Note: Use negative signs with answers as appropriate. Consolidated Income Statement $ Sales Cost of Goods Sold Gross Profit Depreciation & Amort Expense Operating Expenses Interest Expense 0 0 0 0 0 0 Income (loss) from subsidiary 0 Consolidated Net Income 0 Consolidated NI attrib to NCI 0 $ Consolidated NI attrib to Cl 0