Problem $3($Recommended: review slides $16-47)$

Gamma acquired $60\%$ of Delta$$s shares on January $1,2024$ paying $$500,000$ in cash.

Delta$$s balance sheet as of January $1,2024$ and the fair value of Delta$$s assets and liabilities were as follows:

BALANCE SHEET DELTA$-$ Book Value DELTA $$Fair Value

Jan $1,2024$ Jan $1,2024$

Cash $20,00020,000$

Accounts receivable $30,0008,000$

Inventory $250,000180,000$

PPE net $510,000550,000$

Assets $810,000758,000$

Accounts payable $130,000130,000$

LT Liabilities $300,000300,000$

Common stock $480,000$

Retained earnings $(100,000)$

Liabilities $+$ Equity $810,000430,000$

The useful life of the plant equipment is $5$ years starting January $1,2024.$ The turnover of short$-$ term assets and liabilities is less than one year. Additionally, during the due$-$diligence process, Gamma found out that Delta has unrecorded liabilities for product warranties for $$100,000$ that will be likely exercised over $4$ years starting January $1,2024.$

During $2024,$ Delta$$s Net Income was $$355,000$ and Delta paid $$50,000$ in dividends.

In addition, as of December $31,2024$ Gamma determined a goodwill impairment charge equal to

$$90,000$ related to Delta$$s acquisition.

Below are Gamma$$s and Delta$$s Balance Sheets and Income Statements for the year ended December $31,2024$:

BALANCE SHEET GAMMA DELTA

Dec $31,2024$ Dec $31,2024$

Cash $285,000200,000$

Accounts receivable $180,000385,000$

Inventory $520,000400,000$

Investment in Delta $694,400$

PPE net $1,200,000408,000$

Assets $2,879,4001,393,000$

Accounts payable $550,000408,000$

LT Liabilities $1,100,000300,000$

Common stock $300,000480,000$

Retained earnings $929,400205,000$

Liabilities $+$ Equity $2,879,4001,393,000$

INCOME STATEMENT GAMMA DELTA

$20242024$

Revenue $1,000,000910,000$

Investment Income $224,400$

$1,224,400910,000$

COGS $800,000408,000$

Depreciation $120,000102,000$

Expenses $50,00045,000$

$970,000555,000$

Net Income $254,400355,000$

Using the information provided above, please answer the following questions:

$1)$ What is the goodwill at the acquisition date? $($Provide calculation here$)$

$2)$ What is the proportion of goodwill assigned to NCI? $($Provide calculation here$)$

$3)$ What is the ECOBV amortization for the year and the ECOBV ending balances as of December $31,2024?($Provide calculation here$)$

$4)$ What is the balance sheet NCI on December $31,2024?($Provide calculation here$)$

$5)$ What is the NCI share of Net Income for $2024?($Provide calculation here$)$

$6)$ Prepare the consolidation entries.