On January $1,2018,$ Parent Co$.$ acquired $80\%$ of Sub Inc. by paying $$800,000.$ Non$-$controlling

interest was valued at $$200,000.$ Sub reported common stock on that date of $$520,000$ with

retained earnings of $$352,000.$ A building was undervalued in the company's financial records by

$$18,000.$ This building had a ten$-$year remaining life. Copyrights of $$80,000$ were not recognized

and should be amortized over $20$ years. Sub earned income and paid cash dividends as follows:

Net Income Dividends Paid

$2018$ $$115,000$ $$64,600$

$2019$ $$144,400$ $$71,600$

$2020$ $$164,000$ $$94,000$

On December $31,2020,$ the Parent owed $$20,800$ to Sub Inc. There have been no changes in

Sub's common stock account since the acquisition.

$1.$ Prepare the allocation of the acquisition on January $1,2018.$ In your presentation, but sure to

show the excess fair value over cost allocated to the identifiable assets, and any resulting

goodwill. In addition, for the identifiable assets, be sure to calculate the annual amortization of

excess fair value over book value.

$2.$ Prepare journal entries that Parent is required to record associated with the investment under

the Equity Method in $2020$ before preparing the consolidation worksheet.

$3.$ Prepare a T$-$account for the Investment in Sub Co$.$ account from the acquisition in $2018$ up

through the end of $2020.$ Be sure to neatly label each item, showing account balances at the end

of each year $(2018,2019,$ and$2020)$

$4.$ Prepare a T$-$account for the Retained Earnings of Sub Co$.$ account from $2018$ up through the

end of $2020.$ Be sure to neatly label each item, showing account balances at the end of each year.

$(2018,2019,$ and $2020).$

$5.$ Prepare the Consolidation Worksheet entries $($S$,$ A$,$ I, D$,$ E$,$ P$)$ at December $31,2020$:

$6.$ Using Exhibit $1$ below, answer the following two questions:

Exhibit $1$: Worksheet for Income Statement $(2020)$

Note: Equity in Sub Earnings above has been intentionally left blank.

a$.$ Calculate the Non$-$controlling interest income for $2020$ using Exhibit $1$ above. How much is

the NCI income for $2020?$ You must show your well$-$labeled calculations to receive any credit.

b$.$ Calculate the controlling interest income for $2020$ using Exhibit $1$ above. How much is the

controlling interest income for $2020?$ You must show your well$-$labeled calculations to receive

any credit.

$7.$ Using Exhibit $2$ below for $2020,$ answer the following two questions:

Exhibit $2$: Worksheet for Balance Sheet $($partial$)(2020)$

Hint: When calculating NCI, do not forget dividends from Retained Earnings Statement.

c$.$ Using data in Exhibit $2$ above, what would be the consolidated balances for Buildings and for

Copyrights, respectively at the balance sheet date? You must show your well$-$labeled

calculations to receive any credit.

d$.$ Using data in Exhibit $2$ above, what would be the Non$-$controlling interest in the subsidiary at

the balance sheet date, December $31,2020?$ You must show your well$-$labeled calculations.

Solve according to subject named "Business Combinations & Consolidations"