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Parkovash, Incorporated, obtained $100$ percent of Salerno Company's common stock on January $1,2023,$ by issuing $11,200$ shares of

$$10$ par value common stock. Parkovash's shares had a $$15$ per share fair value. On that date, Salerno reported a net book value of

$$120,200.$ However, its equipment $($with a $5-$year remaining life$)$ was undervalued by $$8,700$ in the company's accounting records.

Also, Salerno had developed computer software with an assessed value of $$39,100,$ although no value had been recorded on

Salerno's books. The computer software had an estimated remaining useful life of $10$ years.

The following balances come from the individual accounting records of these two companies as of December $31,2023$:

The following balances come from the individual accounting records of these two companies as of December $31,2024$:

Required:

a$.$ What balance does Parkovash's Investment in Salerno account show on December $31,2024,$ when the equity method is applied?

b$.$ What is the consolidated net income for the year ending December $31,2024?$

c$-1.$ What is the consolidated equipment balance as of December $31,2024?$

c$-2.$ Would this answer be affected by the investment method applied by the parent?

d$.$ Prepare entry ${?}^{\text{P}\text{r}\text{e}\text{p}\text{a}\text{r}\text{e}\text{e}\text{n}\text{t}\text{r}\text{y}*C\text{f}\text{o}\text{r}\text{t}\text{h}\text{e}\text{b}\text{e}\text{g}\text{i}\text{n}\text{n}\text{i}\text{n}\text{g}of\text{t}\text{h}\text{e}\text{R}\text{e}\text{t}\text{a}\text{i}\text{n}\text{e}\text{d}\text{E}\text{a}\text{r}\text{n}\text{i}\text{n}\text{g}\text{s}\text{a}\text{c}\text{c}\text{o}\text{u}\text{n}\text{t}on\text{a}\text{D}\text{e}\text{c}\text{e}\text{m}\text{b}\text{e}\text{r}31,2024byusing\text{i}\text{n}\text{i}\text{t}\text{i}\text{a}\text{l}\text{v}\text{a}\text{l}\text{u}\text{e}\text{,}\text{p}\text{a}\text{r}\text{t}\text{i}\text{a}\text{l}\text{e}\text{q}\text{u}\text{i}\text{t}\text{y}\text{a}\text{n}\text{d}}$

equity method.

Note: $Ifno$ entry $is$ required for a transactio$\frac{n}{e}$vent, select $"No$ journal entry required" $in$ the first account field.

Consolidation

Worksheet Entries

Prepare entry $*Cif$ the parent used the initial value method.

Note: Enter debits before credits. Prepare entry $*C$ for the beginning $of$ the Retained Earnings account $on$ a December $31,2024by$ using initial value, partial equity and

equity method.

Note: $Ifno$ entry $is$ required for a transactio$\frac{n}{e}$vent, select $"No$ journal entry required" $in$ the first account field.

Consolidation

Worksheet Entries

$1$

$3$

Prepare entry $*Cif$ the parent used the partial equity method.

Note: Enter debits before credits. Prepare entry $*C$ for the beginning $of$ the Retained Earnings account $on$ a December $31,2024by$ using initial value, partial equity and

equity method.

Note: $Ifno$ entry $is$ required for a transactio$\frac{n}{e}$vent, select $"No$ journal entry required" $in$ the first account field.

Consolidation

Worksheet Entries

$1$

$2$

$3$

Prepare entry $*Cif$ the parent used the equity method.

Note: Enter debits before credits.$*C$ for the beginning of the Retained Earnings account on a December $31,2024$ by using initial value, partial equity

and equity method.

Complete this question by entering your answers in the tabs below.

Req $A$ to $C2$

a$.$ What balance does Parkovash's Investment in Salerno account show on December $31,2024,$ when the equity method is

applied?

b$.$ What is the consolidated net income for the year ending December $31,2024?$

$c-1.$ What is the consolidated equipment balance as of December $31,2024?$

$c-2.$ Would this answer be affected by the investment method applied by the parent?

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