Chapter 3, Problem 57P

a.

To determine

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

 year ended December 31, 2019 is assessed.

b.

To determine

Explain how the parent company's reported Equity Investment balance as of December 31, 2019 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 December 31, 2019.

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, 2019 (using equity method).

f.

To determine

Prepare the consolidation entries for the year ended December 31, 2019.

g.

To determine

Prepare the consolidation spreadsheet for the year ended December 31, 2019.