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Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $771,200 cash. At the acquisition date, Sierras total fair value, including the noncontrolling interest, was assessed at $964,000 although Sierras book value was only $614,000. Also, several individual items on Sierras financial records had fair values that differed from their book values as follows:

	Book Value				Fair Value
Land	$	65,900			$	280,900
Buildings and equipment (10-year remaining life)		345,000				306,000
Copyright (20-year remaining life)		143,000				299,000
Notes payable (due in 8 years)		(211,000	)			(193,000	)

For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies.

	Padre				Sierra
Revenues	$	(1,488,320	)		$	(589,800	)
Cost of goods sold		705,000				415,000
Depreciation expense		295,000				11,100
Amortization expense		0				7,150
Interest expense		48,600				7,550
Equity in income of Sierra		(114,280	)			0
Net income	$	(554,000	)		$	(149,000	)
Retained earnings, 1/1/18	$	(1,372,500	)		$	(454,000	)
Net income		(554,000	)			(149,000	)
Dividends declared		260,000				65,000
Retained earnings, 12/31/18	$	(1,666,500	)		$	(538,000	)
Current assets	$	953,020			$	566,350
Investment in Sierra		833,480				0
Land		363,000				65,900
Buildings and equipment (net)		971,000				333,900
Copyright		0				135,850
Total assets	$	3,120,500			$	1,102,000
Accounts payable	$	(198,000	)		$	(193,000	)
Notes payable		(506,000	)			(211,000	)
Common stock		(300,000	)			(100,000	)
Additional paid-in capital		(450,000	)			(60,000	)
Retained earnings (above)		(1,666,500	)			(538,000	)
Total liabilities and equities	$	(3,120,500	)		$	(1,102,000	)

At year-end, there were no intra-entity receivables or payables.

Using the acquisition method, prepare the worksheet to consolidate these two companies. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.)

PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Padre Debit Credit Noncontrolling Consolidated Sierra Interest Totals Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Separate company net income Consolidated net income $ (1,488,320)$ (589,800) 415,000 11,100 7,150 7,550 705,000 295,000 48,600 (114,280) $ (554,000)149,000) NI to noncontrolling interest NI to Padre Company Retained earnings 1/1 Net income (above) Dividends declared $ (1,372,500)$ (454,000) (554,000) (149,000) 65,000 $ (1,666,500)$ (538,000) $953,020 $ 566,350 260,000 Retained earnings 12/31 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright 833,480 363,000 971,000 65,900 333,900 135,850 $ 3,120,500 $ 1,102,000 $ (198,000)$ (193,000) (506,000) (211,000) Total assets Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 Common stock Additional paid-in capital Retained earnings 12/31 (above) Total liabilities and stockholders' equity (300,000)(100,000) (450,000) (60,000) (1,666,500)(538,000) $ (3,120,500)S(1,102,000)$

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