Chapter 3, Problem 53P

a.

To determine

Explain how the parent company's pre-consolidation Investment Income for the

 year ended Dec 31, 2016 is assessed.

b.

To determine

Explain how the parent company's reported Equity Investment balance as of Dec 31,

2016 is assessed.

c.

To determine

Assess the retained earnings balance of the subsidiary as of the date of acquisition.

d.

To determine

Compute the Equity Investment balance at Dec 31, 2016.

e.

To determine

Prepare the [ADJ] entry necessary to bring Equity Investment from its current balance (using cost method) to the required balance on January 1, 2016 (using equity method).

f.

To determine

Prepare the consolidation entries for the year ended Dec 31, 2016.

g.

To determine

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