PROBLEM 2:On January 1, 2016 Venti Corporation exchanged $172,000 cash for a 90% interest in Krunk Corporations outstanding voting stock. Krunks acquisition balance sheet is in the accompanying Excel spreadsheet along with the financial statements for both companies for the year ended December 31, 2018.

On January 1, 2016, Venti prepared the following fair value allocation schedule:

Consideration transferred by Venti............................................. 172,000

10% noncontrolling interest fair value....................................... 18,000

Fair value of Krunk..................................................................... 190,000

Book value of Krunk................................................................... 162,000

Excess fair value over book value................................................ 28,000

Allocated to equipment (remaining life=9 years)...................... 9,000

Allocated to goodwill................................................................ 19,000

Required:

1. Prepare a schedule showing the allocation of the goodwill to the controlling and noncontrolling interest.
2. Prepare a schedule showing the Ventis Equity in Krunks Earnings for 2016, 2017, and 2018.
3. Prepare a schedule showing how Venti determined the $244,450 balance in the Investment in Krunk account.

Krunk Balance Sheet As of January 1, 2016 Cash and receivables Inventory Property and equipment (net) 15,000 35,000 350,000 400,000 76,000 150,000 174,000 400,000 TOTAL Liabilities Common stock Retained earnings TOTAL Financial Statements December 31, 2018 Venti Sales Cost of goods sold Depreciation expense Equity in Krunk's earnings 862,000 515,000 191,200 79,200 235,000 366.000 209,000 67,000 Separate company net income 90,000 Retained earnings, 1/1 Net income Dividends 500,000 235,000 130,000 605,000 278,000 90,000 27000 341,000 Retained earnings, 12/31 82,000 136,000 Cash and receivables Inventory Investment in Krunk Property and equipment (net) 135,000 255,000 488,900 964,000 1,842,900 328,000 546,000 Total assets 722,900 515,000 Liabilities Common stock- Venti Common stock Krunk Retained earnings, 12/31 55,000 150,000 341,000 Total liabilities and equity1,842,900546,000 605,000 Krunk Balance Sheet As of January 1, 2016 Cash and receivables Inventory Property and equipment (net) 15,000 35,000 350,000 400,000 76,000 150,000 174,000 400,000 TOTAL Liabilities Common stock Retained earnings TOTAL Financial Statements December 31, 2018 Venti Sales Cost of goods sold Depreciation expense Equity in Krunk's earnings 862,000 515,000 191,200 79,200 235,000 366.000 209,000 67,000 Separate company net income 90,000 Retained earnings, 1/1 Net income Dividends 500,000 235,000 130,000 605,000 278,000 90,000 27000 341,000 Retained earnings, 12/31 82,000 136,000 Cash and receivables Inventory Investment in Krunk Property and equipment (net) 135,000 255,000 488,900 964,000 1,842,900 328,000 546,000 Total assets 722,900 515,000 Liabilities Common stock- Venti Common stock Krunk Retained earnings, 12/31 55,000 150,000 341,000 Total liabilities and equity1,842,900546,000 605,000