On January 1, 2009, Parent acquired 65% of Sub by paying The control premium included in the price is Sub's reported

book value of common stock on that date is and retained earnings is A building with 10-year remaining life was undervalued by Copy rights were to be recognized and amortized over 20 years On December 31, 2011, Parent owed $35,000 to Sub. Sub's common stock has no Change since the acquisition The sub earned income and paid cash dividends as follows: Net Income 98,000 126,000 132,000 Dividends Paid 54,000 57,000 86,000

650,000 26,000 420,000 240000 36000 60,000 35,000

65%

1/1/2009

10 20

2009 2010 2011

Required: If the equity method has been applied by Parent for this investment, Prepare consolidation entries as of December 31, 2011 12/31/2011

1/1/2009 Fair value allocation and amortization, Sub's acquisition date fair value Sub's acquisition date book value Excess fair value Adjustments Building Copyrights Goodwill Allocation 36000 60,000 230,000 Service Life 10 20 Annual Amortization 3600 3000 -

986,000 660,000 326,000

Goodwill allocation, Fair value FV of identifiable net assets Goodwill

1/1/2009 CI 650,000 491400 158,600

NCI 336,000 264600 71,400

Total 986,000 756,000 230,000

Other Updates Sub's Retained Earnings 54,000 240000 57,000 98,000 126,000 353,000 Parent's Equity in Sub's Earnings 4,290 85,800 1/1/2009 81,510 1/1/2011 12/31/2011

Excess amortization as of Allocation 36,000 60,000

Building Copyrights

1/1/2011 Amortization 1/1//09 - 1/1/11 7,200 6,000

Balance (1/1/2011) 28,800 54,000

Consolidation Entries,

12/31/2011 420,000 353,000 1/1/2011 28,800 54,000 230,000 502,450 270,550

[S] Common Stock (s) Retained Earnings (s), 1/1/2011 Investment in S Noncontrolling Interest in S, [A] Building Copyrights Goodwill Investment in S Noncontrolling Interest in S.

1/1/2011

212,420 100,380

[I] Equity in Sub's Earnings Investment in S

81,510 81,510

[D] Investment in S Dividends Paid [E] Depreciation Expense Amortization Expense Building Copyrights [P] Accounts Payable Accounts Receivable

55,900 55,900 3600 3000 3600 3000 35,000 35,000

Noncontrolling Interests Adjustments NCI in Sub's Earnings Dividends to NCI 43,890 (30,100)