The Patterson Corporation acquired 70 percent of the 100,000 outstanding voting shares of Shapiro, Inc., for...

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The Patterson Corporation acquired 70 percent of the 100,000 outstanding voting shares of Shapiro, Inc., for $7.20 per share on January 1, 2021. The remaining 30 percent of Shapiro's shares traded actively at $4.80 per share before and after Patterson's acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Shapiro's underlying accounts except that a building with a 5-year future life was undervalued (i.e., book value is lower than fair value) by $85,500 and a fully amortized trademark (i.e., zero book value) with an estimated 10-year remaining life had a $64,000 fair value. At the acquisition date, Shapiro reported common stock of $100,000 and a retained earnings balance of $226,500. Following are the separate financial statements for the year ending December 31, 2023: Patterson Corporation $ (641,000) Shapiro Inc. $ (399,000) 198,000 176,000 273,000 126,000 (51,450) -0- Sales Cost of goods sold Operating expenses Equity income Net income Retained earnings, 1/1 $ (221,450) $ (97,000) (799,200) (386,500) Net income (above) (221,450) (97,000) Dividends declared 70,000 18,000 Retained earnings, 12/31 $ (950,650) $ (465,500) Current assets 133,700 120,500 Investment in Shapiro 621,950 -0- Buildings and equipment (net) Trademarks Total assets 887,000 149,000 335,000 236,000 $ 1,791,650 $ 691,500 Liabilities Common stock (535,000) (306,000) (126,000) (100,000) Retained earnings, 12/31 (above) Total liabilities and equities (950,650) (465,500) $ (1,791,650) $ (691,500) Credit balances are in parentheses. At year-end, there were no intra-entity receivables or payables. Required: 1. (12 points) Prepare an acquisition-date fair value allocation schedule. Determine the annual amortization of excess value for the investment in Shapiro, the amount of goodwill, if any, and how the goodwill will be allocated between Patterson and the noncontrolling interest. 2. (6 points) Given the information provided, determine all entries made to Investment in Shapiro in Patterson's book during 2023. Show the t-account, the beginning Investment balance on January 1, 2023, all entries posted during 2023, and the ending balance on December 31, 2023. (Hint: Work backwards from the Investment balance on 12.31.23 (given) to obtain the Investment balance on 1.1.23) 3. (32 points) Use the provided worksheet (in Excel) to consolidate these two companies as of December 31, 2023 and do the following: (20 points) Prepare a list of consolidation entries (12 points) Determining the consolidated totals Patterson Corporation and Shapiro, Inc. Consolidation Worksheet For Year Ending December 31, 2023 Consolidation Entries Accounts Sales Cost of goods sold Operating expenses Equity Income in Shapiro Separate company net income Patterson Corporation Shapiro Inc. -641,000 -399,000 198,000 176,000 273,000 126,000 -51,450 0 -221,450 -97,000 Consolidated net income NI attributable to noncontrolling interest NI attributable to Patterson Corp. Retained earnings, 1/1 -799,200 -386,500 Net income (above) -221,450 -97,000 Dividends declared 70,000 18.000 Retained earnings, 12/31 -950,650 -465,500 Current assets 133,700 120,500 Investment in Shapiro 621,950 Buildings and equipment (net) 887,000 335,000 Trademarks 149,000 236,000 Goodwill Total assets 1,791,650 691,500 Liabilities -535,000 -126,000 Common stock -306,000 -100,000 Retained earnings, 12/31 (above) -950,650 -465,500 NCI in Shapiro, 1/1 NCI in Shapiro, 12/31 Total liabilities and equities -1,791,650 -691,500 Debit Consolidated Credit Interest Totals The Patterson Corporation acquired 70 percent of the 100,000 outstanding voting shares of Shapiro, Inc., for $7.20 per share on January 1, 2021. The remaining 30 percent of Shapiro's shares traded actively at $4.80 per share before and after Patterson's acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Shapiro's underlying accounts except that a building with a 5-year future life was undervalued (i.e., book value is lower than fair value) by $85,500 and a fully amortized trademark (i.e., zero book value) with an estimated 10-year remaining life had a $64,000 fair value. At the acquisition date, Shapiro reported common stock of $100,000 and a retained earnings balance of $226,500. Following are the separate financial statements for the year ending December 31, 2023: Patterson Corporation $ (641,000) Shapiro Inc. $ (399,000) 198,000 176,000 273,000 126,000 (51,450) -0- Sales Cost of goods sold Operating expenses Equity income Net income Retained earnings, 1/1 $ (221,450) $ (97,000) (799,200) (386,500) Net income (above) (221,450) (97,000) Dividends declared 70,000 18,000 Retained earnings, 12/31 $ (950,650) $ (465,500) Current assets 133,700 120,500 Investment in Shapiro 621,950 -0- Buildings and equipment (net) Trademarks Total assets 887,000 149,000 335,000 236,000 $ 1,791,650 $ 691,500 Liabilities Common stock (535,000) (306,000) (126,000) (100,000) Retained earnings, 12/31 (above) Total liabilities and equities (950,650) (465,500) $ (1,791,650) $ (691,500) Credit balances are in parentheses. At year-end, there were no intra-entity receivables or payables. Required: 1. (12 points) Prepare an acquisition-date fair value allocation schedule. Determine the annual amortization of excess value for the investment in Shapiro, the amount of goodwill, if any, and how the goodwill will be allocated between Patterson and the noncontrolling interest. 2. (6 points) Given the information provided, determine all entries made to Investment in Shapiro in Patterson's book during 2023. Show the t-account, the beginning Investment balance on January 1, 2023, all entries posted during 2023, and the ending balance on December 31, 2023. (Hint: Work backwards from the Investment balance on 12.31.23 (given) to obtain the Investment balance on 1.1.23) 3. (32 points) Use the provided worksheet (in Excel) to consolidate these two companies as of December 31, 2023 and do the following: (20 points) Prepare a list of consolidation entries (12 points) Determining the consolidated totals Patterson Corporation and Shapiro, Inc. Consolidation Worksheet For Year Ending December 31, 2023 Consolidation Entries Accounts Sales Cost of goods sold Operating expenses Equity Income in Shapiro Separate company net income Patterson Corporation Shapiro Inc. -641,000 -399,000 198,000 176,000 273,000 126,000 -51,450 0 -221,450 -97,000 Consolidated net income NI attributable to noncontrolling interest NI attributable to Patterson Corp. Retained earnings, 1/1 -799,200 -386,500 Net income (above) -221,450 -97,000 Dividends declared 70,000 18.000 Retained earnings, 12/31 -950,650 -465,500 Current assets 133,700 120,500 Investment in Shapiro 621,950 Buildings and equipment (net) 887,000 335,000 Trademarks 149,000 236,000 Goodwill Total assets 1,791,650 691,500 Liabilities -535,000 -126,000 Common stock -306,000 -100,000 Retained earnings, 12/31 (above) -950,650 -465,500 NCI in Shapiro, 1/1 NCI in Shapiro, 12/31 Total liabilities and equities -1,791,650 -691,500 Debit Consolidated Credit Interest Totals