The due date for this comprehensive problem is Wednesday, November $20,2024.$ You are to email your answer which should include a completed consolidation worksheet, consolidation entries including an explanation line, a consolidated income statement, and a consolidated balance sheet for $2022.$ This is a $100-$point exercise. You are to work individually on this problem and to have no assistance. You may use your textbook and notes. It covers accounting issues from chapters $1$ through $5.$ The problem includes a fact pattern presented below and an Excel spreadsheet containing the $2022$ financial statements of Mack Corp $($the Parent$)$ and KappCo $($the Subsidiary$).$ The problem should be prepared on Excel spreadsheet$($s$).$ If you have any questions or need any clarification, please contact me$.$ Good luck!

Mack Corp, a closely$-$held manufacturer having a calendar year$-$end, searched for a vendor to provide it with a supply of quality widgets for its production facility. It had done business with KappCo for several years, and an opportunity to acquire the vendor was eagerly consummated. Mack Corp purchased $90$ percent of KappCo on January $1,2021,$ for $$657,000$ in cash. On that date, the $10$ percent noncontrolling interest was appraised to have a $$73,000$ fair value. On the date of acquisition, KappCo had a book value of $$600,000.$ Also at the acquisition date, KappCo held equipment $($four$-$year remaining life$)$ undervalued in its financial records by $$20,000$; interest$-$bearing liabilities $($five$-$year remaining life$)$ overvalued by $$40,000$; and the remainder of the excess of fair value over book value was assigned to previously unrecognized brand names $($trade marks$)$ with a fair value of $$50,000$ and an estimated $10-$year life. Mack uses the initial value method for accounting for its investment in KappCo.

Mack Corp sold KappCo an old building and lot on January $2,2021.$ On the date of the sale, the land on Mack$$s books was valued at $$15,000$ and had a sale value of $$20,000.$ The building had a cost on Mack$$s books of $$100,000,$ with $$90,000$ in accumulated depreciation. It had a sale value of $$25,000$ with a five$-$year remaining life. This was a cash sale. KappCo has used the land and building in its business operations since its purchase from Mack.

Each year, KappCo sells Mack Corp inventory at a $20$ percent gross profit rate. Intercompany sales were $$145,000$ in $2021$ and $$160,000$ in $2022.$ On January $1,2021,30$ percent of the $2020$ transfers were still on hand, and on December $31,2022,40$ percent of the $2021$ transfers remained unsold by Mack.

In fiscal year $2021,$ KappCo reported a net income of $$80,000$ and did not declare a dividend. In $2022,$ Mack Corp. declared dividends of $$130,000,$ and KappCo declared dividends of $$50,000.$ As of December $321,2022,$ Mack Corp owed KappCo $$17,000$ for inventory it had purchased in $2022.\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Financial Statements for Mack Corp and KappCo for $2022\}\backslash \backslash$

$\backslash$hline & $\backslash$multicolumn$\{2\}\{|$l$|\}\{$Mack Corp$\}$ & $\backslash$multicolumn$\{2\}\{|$l$|\}\{$KappCo$\}\backslash \backslash$

$\backslash$hline Sales & $\backslash$$ & $800,000$ & $\backslash$$ & $600,000\backslash \backslash$

$\backslash$hline Cost of Goods Sold & $\backslash$$ & $500,000$ & $\backslash$$ & $400,000\backslash \backslash$

$\backslash$hline Selling and Administrative Expenses & $\backslash$$ & $70,000$ & $\backslash$$ & $110,000\backslash \backslash$

$\backslash$hline Interest Expense & $\backslash$$ & $10,000$ & $\backslash$$ & $20,000\backslash \backslash$

$\backslash$hline Depreciation Expense & $\backslash$$ & $20,000$ & $\backslash$$ & $30,000\backslash \backslash$

$\backslash$hline Other Income and Losses & $\backslash$$ & $45,000$ & $\backslash$$ & $-\backslash \backslash$

$\backslash$hline Net Income & $\backslash$$ & $155,000$ & $\backslash$$ & $40,000\backslash \backslash$

$\backslash$hline Retained Earnings, Jan. $1,2022$ & $\backslash$$ & $990,000$ & $\backslash$$ & $550,000\backslash \backslash$

$\backslash$hline Net Income & $\backslash$$ & $200,000$ & $\backslash$$ & $40,000\backslash \backslash$

$\backslash$hline Dividends Declared & $\backslash$$ & $130,000$ & $\backslash$$ & $50,000\backslash \backslash$

$\backslash$hline Retained Earnings, Dec. $31,2022$ & $\backslash$$ & $1,060,000$ & $\backslash$$ & $540,000\backslash \backslash$

$\backslash$hline Cash & $\backslash$$ & $30,000$ & $\backslash$$ & $50,000\backslash \backslash$

$\backslash$hline Accounts Receivable $($net$)$ & $\backslash$$ & $187,000$ & $\backslash$$ & $130,000\backslash \backslash$

$\backslash$hline Inventory & $\backslash$$ & $224,000$ & $\backslash$$ & $160,000\backslash \backslash$

$\backslash$hline Investment in KappCo & $\backslash$$ & $657,000$ & $\backslash$$ & $-\backslash \backslash$

$\backslash$hline Equipment, $($net$)$ & $\backslash$$ & $600,000$ & $\backslash$$ & $420,000\backslash \backslash$

$\backslash$hline Buildings & $\backslash$$ & $1,000,000$ & $\backslash$$ & $650,000\backslash \backslash$

$\backslash$hline Accumulated Depreciation$-$Buildings & $\backslash$$ & $100,000$ & $\backslash$$ & $200,000\backslash \backslash$

$\backslash$hline Land & $\backslash$$ & $-$ & $\backslash$$ & $20,000\backslash \backslash$

$\backslash$hline Other Assets & $\backslash$$ & $200,000$ & $\backslash$$ & $80,000\backslash \backslash$

$\backslash$hline Total Assets & $\backslash$$ & $2,798,000$ & $\backslash$$ & $1,310,000\backslash \backslash$

$\backslash$hline Accounts Payable & $\backslash$$ & $400,000$ & $\backslash$$ & $190,000\backslash \backslash$

$\backslash$hline Other Current Liabilities & $\backslash$$ & $100,000$ & $\backslash$$ & $60,000\backslash \backslash$

$\backslash$hline Notes Payable & $\backslash$$ & $638,000$ & $\backslash$$ & $370,000\backslash \backslash$

$\backslash$hline Common Stock, No Par Value & $\backslash$$ & $600,000$ & $\backslash$$ & $150,000\backslash \backslash$

$\backslash$hline Retained Earnings, Dec. $31,2022$ & $\backslash$$ & $1,060,000$ & $\backslash$$ & $540,000\backslash \backslash$

$\backslash$hline Total Liabilities and Stockholders' Equity & $\backslash$$ & $2,798,000$ & $\backslash$$ & $1,310,000\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$