Please help me with this question:

Consolidation subsequent to date of acquisition-upstream intercompany inventory sale- Equity method with noncontrolling interest, AAP, and upstream intercompany inventory sale

Assume that, on January 1, 2007, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $550,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. the parent assigned the excess to the following [A] assets:

[A] Asset Initial Fair Value Useful Life (years)

Patent $300,000 10

Goodwill $250,000 Indefinite

$550,000

80% of the Goodwill is allocated to the parent. Assume that the subsidiary sells inventory to the parent (upstream) which includes that inventory in products that it ultimately sells to customers outside of the controlled group. You have compiled the following data as of 2012 and 2013:

2012 2013 Transfer price for inventory sale $674,000 $733,000 Cost of goods sold (615,000) (653,000) Gross profit $59,000 $80,000 % inventory remaining 25% 35% Gross profit deferred $14,750 $28,000 EOY receivable/payable $93,000 $105,000 The inventory not remaining at the end of the year has been sold outside of the controlled group.Parent Income statement: Sales $6,770,000 Cost of goods sold (42731000) Gross prot 250315000 Equity income 249,872 (1,242,600) Operating expenses Net income $1'038'272 Statement of retained earnings: BOY retained earnings $3,401,248 Net income 1,03 8,272 Dividends (199,210) EOY retained earnings $4'240'3 10 Subsidiary $2,521,500 (1,511,100) 1,010,400 (654,810) 355,590 $1,301,225 355,590 (35,259) $1,621,556 Parent Balance sheet: Assets Cash $798,240 Accounts receivable 866,560 Inventory 1,313,380 Equity investment 1'849'065 Property, plant and equipment (PPE), net 6'317'764 $1 1,145,009 Liabilities and stockholders' equity Current liabilities $972,849 Long-term liabilities 4,000,000 Common stock 1,106,895 APIC 824,955 Retained earnings 4'240'3 10 $1 1,145,009 Subsidiary $699,785 584,292 750,513 1,388,533 $3,423,123 $584,292 839,500 167,900 209,875 1,621,556 $3,423,123