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. Consolidation entry questions: 30 points Assume Parent buys all the shares of Sub on Jan. 1, Year 1, for $10,000,000. At the date of acquisition, Sub has the following selected balances: Common stock $500,000 Paid-in capital $2,000,000 Retained earnings $6,000,000 Total equity $8,500,000 In addition, Sub owned a patent with zero value on its books but a fair value of $300,000. It had a remaining life of 10 years. All of Sub's other assets and liabilities had a value equal to their book values at the acquisition date. Parent accounted for its investment in sub using the equity method. At the end of Year 1, some key balances are: Parent Sub Revenues 4,000,000 1,000,000 Expenses 3,750,000 900,000 Equity in income from sub 100,000 Dividends paid $30,000 $20,000 Investment in sub 10,050,000 15. Make the entry corresponding to Entry S in the text, to eliminate the beginning subsidiary equity against part of the investment in sub account. (5 points) 16. Make the entry corresponding to entry A in the text, to adjust the patent to the acquisition date fair value, recognize the goodwill, and eliminate part of the investment in sub account. (5) (Hint - goodwill needs to be computed) 17. Make the entry corresponding to entry I in the text, eliminating the equity in sub earnings against part of the investment in sub account. (5) 18. Make the entry corresponding to entry D in the text, eliminating the intercompany dividend. (5) 19. Make the entry corresponding to entry E in the text, to report the patent amortization and adjust the carrying value of the patent. (5) 20. Show that after the entries you made above, the investment in sub account is fully eliminated (brought equal to zero) in consolidation

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