Consolidation subsequent to date of acquisition - Equity method with noncontrolling interest and AAP Assume that, on January 1, 2009, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $500,000 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) [A] Asset Initial Fair Value Useful Life (years) Property, plant and equipment (PPE), net $100,000 10 Customer list 150,000 10 Goodwill 250,000 Indefinite $500,000 80% of the Goodwill is allocated to the parent. The parent and the subsidiary report the following financial statements at December 31, 2013: Parent Subsidiary Parent Subsidiary Income statement: Balance sheet: Sales $7,330,000 $1,870,500 Assets Cost of goods sold (5,131,000) (1,122,300) Cash $411,313 $131,511 Gross profit 2,199,000 748,200 Accounts receivable 938,240 433,956 Income (loss) from subsidiary 189,496 Inventory 1,422,020 557,409 Operating expenses (1,392,700) (486,330) Equity investment 1,475,671 Net income $995,796 261,870 Property, plant and equipment (PPE), net 5,374,356 1,280,669 $9,621,600 $2,403,545 Statement of retained earnings: BOY retained earnings $3,682,592 $966,425 Liabilities and stockholders’ equity Net income 995,796 261,870 Current liabilities $1,053,321 $433,956 Dividends (199,159) (39,281) Long-term liabilities 2,000,000 500,000 EOY retained earnings $4,479,229 $1,189,014 Common stock 1,198,455 124,700 APIC 890,595 155,875 Retained earnings 4,479,229 1,189,014 $9,621,600 $2,403,545 d. Reconstruct the activity in the parent’s pre-consolidation Equity Investment T-account for the year of consolidation. Round answers to the nearest whole number. Equity Investment Balance at 1/1/13 Answer Answer AnswerNet incomeDividendsAAP amortization Answer Answer Dividends Answer Answer AnswerNet incomeDividendsAAP amortization Balance at 12/31/13 Answer Answer e. Independently compute the owners’ equity attributable to the noncontrolling interest beginning and ending balances starting with the owners’ equity of the subsidiary. Round answers to the nearest whole number. Noncontrolling interest at 1/1/13: Common stock Answer APIC Answer Retained earnings Answer AnswerCommon stockAPICRetained earningsUnamortized AAP Answer Answer Noncontrolling interest at 12/31/13: Common stock Answer APIC Answer Retained earnings Answer AnswerCommon stockAPICRetained earningsUnamortized AAP Answer Answer f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Round answers to the nearest whole number. Use negative signs with answers that are deductions. Consolidated: Parent's stand-alone net income Answer Subsidiary's stand-alone net income Answer Less: Answer100% AAP amortization80% AAP amortization20% AAP amortization Answer Subsidiary's adjusted stand-alone net income Answer Consolidated net income Answer Parent: Parent's stand-alone net income Answer Subsidiary's stand-alone net income Answer Less: Answer100% AAP amortization80% AAP amortization20% AAP amortization Answer >80% of subsidiary's stand-alone net income Answer Consolidated net income attributable to the parent Answer Subsidiary: 20% of subsidiary's stand-alone net income Answer Less: Answer100% AAP amortization80% AAP amortization20% AAP amortization Answer Answer