E5.7

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5.7 Goodwill, Equity Method, Eliminating Entries, First Year (see related E4.3) On January 1, 2020, Playtel Inc. acquired 75 percent of the stock of San Jose Cable for $200 million in cash. At the date of acquisition, the fair value of the noncontrolling interest was $50 million, and Playtel's shareholders equity accounts were as follows (in thousands): L Common stock, $1 par.. Additional paid-in capital Retained deficit 5,000 25,000 (1,000) Treasury stock (800) Total. $28,200 Both companies have a December 31 year-end. At the date of acquisition, San Jose's reported net assets had book values approximating fair value. However, it had previously unreported indefinite-life identifi- able intangibles valued at S50 million, meeting ASC Topic 805 requirements for capitalization. Impair- ment losses in 2020 for identifiable intangibles were $1 million. Goodwill from this acquisition was not impaired the complete equity method to report its investment in San Jose on its own books. in 2020. San Jose reported net income of $4 million in 2020, and paid no dividends. Playtel uses Required Calculate the original amount of goodwill for this acquisition and its allocation to the controlling and noncontrolling interest. Calculate equity in net income of San Jose, reported on Playtel's books in 2020, and noncontrolling a. b. interest in net income, reported on the consolidated income statement Prepare eliminating entries (C), (E). (R), (O) and (N), required to consolidate Playtel's trial balance c. accounts with those of San Jose on December 31, 2020