Consolidation several years subsequent to date of acquisition - Equity method Iincludes* LOVE , A Impairment of Gundwill!` {{suite that 's parent...

aCompute the Equity Investment balance as of January 1, 2016.

b. Show the computation to yield the $227,400 of Equity Income reported by the parent for the year

ended December 31, 2016.

c. Show the computation to yield the $1,836,000 Equity Investment account balance reported by the

parent at December 31, 2016.

d. Prepare the consolidation entries for the year ended December 31, 2016.

e. Prepare the consolidation spreadsheet for the year ended December 31, 2016.

f. Now, assume that, prior to the issuance of your consolidated financial statements, you perform

your annual test for potential impairment of Goodwill. You decide to forego the option to perform

a qualitative assessment to determine whether it is more likely than not that the fair value of

the reporting unit is less than the carrying value of the reporting unit. You estimate that the fair

value of the subsidiary is $1.8 million and the fair value of the identifiable net assets (other than

}1 . Consolidation several years subsequent to date of acquisition - Equity method Iincludes*LOVE , AImpairment of Gundwill!`{{suite that 's parent company acquired a subsidiary in January 1 . 2012 . The purchase price warsEE`{540. `^ in excess of the subsidiary's book value of Stockholders " Equity on the acquisition date , andThat excess was assigned to the following [ A ] assets .`ONE!Original[A] ASSETAmountUseful LifePatent ....& VEBITE!Goodwill .300, 00 0Indefin TE$5410, 0:00The [AT assets with definite useful lives have been depreciated or summarized as part of the parent's pre-consolidation equity method accounting . The Goal will asset has been tested annually for imminent.and has not been found to be impaired .\The Financial statements of the parent and its subsidiary for the year ended December 31 . 2710, areParentSubsidiaryParentSubsidiaryINCOME Statement .Balance SheetSALE``. .. . . . .. . . . . ". "$ 1, 240, 2010ASSAIL!`Last of good^ ^^d ....$ 1 , 104, 501]L`Tin .5. 390, 0005. 474, 000GROSS profit ..... .$1 1. 200Accounts receivable .....ART, ED`EQUITY INCOME . . ......227, 400Inventory . .......`1. 540, 200948, 400Operating EXPENSES . ...`15.95.20 0^|4TB, BODY\Equity Investment ...1. EL]6 , 200NET Income ....$49 400257, 400Property , plant and equipment (FREY . net ...1. 015, 200Statement of retained Earnings .EQTY' retained Earnings ....`$ 1. 754. 400$ 751. 000Liabilities and stockholders" EquityNet income ...$ $2. 400257. 400ACCOUNTS payable .....5 59.]. 2005. 175, 20 0Dividends. ...|150.010 0*Accrued liabilities ....`2 29, 200Ending retained Earnings ..DZ. DAT BOD$ 1. ITO.OOOLong - familial it Ers .`$14, 40^Common Stock ...122, 4001. 54.5, 0 0^15.3. 6:0^Retained Earnings .. ..`1. 170. 000$7. 20 4, 200Compute the Equity Investment balance as of January 1 , 2010 .Show the computation to wield the $277, 400 of Equity Income reported by the parent for the yearEnded December 3 1, 20/16 .`Show the computation to yield the $1.*&^` Equity Investment account balance reported by theparent at December 3 1 , 201 1 .`it .Prepare the consolidation entries for the year ended December 31, 2010 .`Prepare the consolidation spread sheet for the year Ended December 31 , 2010.HOW, assume that , prior to the issuance of your consolidated financial statements , you perturn*your annual fest for potential impairment of Civil will . You decide In force " the option to perform" qualitative assessment to determine whether it is more likely than not that the fair value ofthe reporting unit is less than the carrying value of the reporting unit . You estimate that the fairvalue of the subsidiary is $ 1. & million and the fair value of the identifiable n't assets. (other than