56. a.

Unamort Unamort Unamort Unamort

AAP 2016 AAP 2017 AAP 2018 AAP 2019
100% 1/1/2016 Amort 12/31/2016 Amort 12/31/2017 Amort 12/31/2018 Amort
Patent $171,000 $17,100 $153,900 $17,100 $136,800 $17,100 $119,700 $17,100
Goodwill 285,000 0 285,000 0 285,000 0 285,000 0
$456,000 $17,100 $438,900 $17,100 $421,800 $17,100 $404,700 $17,100

80%
Patent $136,800 $13,680 $123,120 $13,680 $109,440 $13,680 $95,760 $13,680
Goodwill 228,000 0 228,000 0 228,000 0 228,000 0
$364,800 $13,680 $351,120 $13,680 $337,440 $13,680 $323,760 $13,680

20%
Patent $34,200 $3,420 $30,780 $3,420 $27,360 $3,420 $23,940 $3,420
Goodwill 57,000 0 57,000 0 57,000 0 57,000 0
$91,200 $3,420 $87,780 $3,420 $84,360 $3,420 $80,940 $3,420

Unamort Unamort Unamort Unamort

AAP 2020 AAP 2021 AAP 2022 AAP
100% 12/31/2019 Amort 12/31/2020 Amort 12/31/2021 Amort 12/31/2022
Patent $102,600 $17,100 $85,500 $17,100 $68,400 $17,100 $51,300
Goodwill 285,000 0 285,000 0 285,000 0 285,000
$387,600 $17,100 $370,500 $17,100 $353,400 $17,100 $336,300

80%
Patent $82,080 $13,680 $68,400 $13,680 $54,720 $13,680 $41,040
Goodwill 228,000 0 228,000 0 228,000 0 228,000
$310,080 $13,680 $296,400 $13,680 $282,720 $13,680 $269,040

20%
Patent $20,520 $3,420 $17,100 $3,420 $13,680 $3,420 $10,260
Goodwill 57,000 0 57,000 0 57,000 0 57,000
$77,520 $3,420 $74,100 $3,420 $70,680 $3,420 $67,260

b Downstream Upstream
.
Intercompany profit on 1/1/22 0 $26,600
Intercompany profit on 12/31/22 0 $35,625
56. c.
Equity Investment account at 1/1/22
p% x book value of the net assets of subsidiary $942,400
Add: unamortized (p%) AAP 282,720
Less: p% of upstream deferred intercompany profits (21,280)
$1,203,840

Equity Investment account at 12/31/22:

p% x book value of the net assets of subsidiary $1,064,000
Add: unamortized (p%) AAP 269,040
Less: p% of upstream deferred intercompany profits (28,500)
$1,304,540

d. Equity Investment
Equity Investment at 1/1/22 1,203,840
p% Net Income 152,000 30,400 p% Dividends
p% BOY U-s inventory profits 21,280 13,680 p% AAP Amortization
28,500 p% EOY U-S inventory profits
Equity Investment at 12/31/22 1,304,540

e. Noncontrolling interest at 1/1/22

nci% of book value of the net assets of subsidiary $235,600
Add: nci% unamortized AAP 70,680
Less: nci% of upstream deferred intercompany profits (5,320)
$300,960

Noncontrolling interest at 12/31/22

nci% of book value of the net assets of subsidiary $266,000
Add: nci% unamortized AAP 67,260
Less: nci% of upstream deferred intercompany profits (7,125)
$326,135
56. f.

Parent's stand-alone net income $190,000

Subsidiary's stand-alone net income 190,000
Plus: 100% realized upstream deferred profits 26,600
Less: 100% unrealized upstream deferred profits (35,625)
Less: 100% AAP amortization (17,100)
Consolidated net income $353,875

Parent's stand-alone net income $190,000

p% of subsidiary's stand-alone net income 152,000
Plus: p% realized upstream deferred profits 21,280
Less: p% unrealized upstream deferred profits (28,500)
Less: p% AAP amortization (13,680)
Consolidated net income attributable to the controlling interest $321,100

nci% of subsidiary's stand-alone net income $38,000

Plus: nci% realized upstream deferred profits 5,320
Less: nci% unrealized upstream deferred profits (7,125)
Less: nci% AAP amortization (3,420)
Consolidated net income attributable to the noncontrolling interest $32,775
56. g. [C] Equity investment income 131,100
Consol. NI attributable to NCI 32,775
Dividends 38,000
Equity Investment 100,700
Noncontrolling interest 25,175
Eliminates the change in the investment account of AAP
adjusted changes in SE(S)

[E] Common stock (S) @BOY 95,000

APIC (S) @BOY 190,000
Retained earnings (S) @BOY 893,000
Equity investment @BOY 942,400
Noncontrolling interest (@BOY) 235,600
Eliminates the beginning balance in SE(S) by eliminating the
BV portion of the beginning investment account

[A] Patent, net @BOY (100% AAP) 68,400

Goodwill @BOY (100% AAP) 285,000
Equity investment @BOY ( AAP) 282,720
Noncontrolling interest 70,680
Allocates beginning-of-year 100% AAP to the controlling and
noncontrolling interests by eliminating the remaining
investment account and establishing the BOY AAP for nci%

[D] Operating Expenses (for 100% AAP amort) 17,100

Patent, net (for 100% AAP amort) 17,100
Recognition of dep and amort of AAP assets

[Icogs] Equity investment 21,280

Noncontrolling interest @ BOY 5,320
Cost of goods sold 26,600
Recognition of deferred gain on inventory sale and
proration between parent and subsidiary

[Isales] Sales 570,000

Cost of goods sold 570,000
Elimination of 100% of all intercompany transactions

[Icogs] Cost of goods sold 35,625

Inventory 35,625
Deferral of gross profit on this year’s inventory sales

[Ipay] Accounts payable 133,000

Accounts receivable 133,000
 Elimination of intercompany receivable and payable
56. g. continued
Parent Subsidiary Dr Cr Consol
Income Statement:
Sales $6,365,000 $2,375,000 [Isales] 570,000 $8,170,000
Cost of Goods sold (4,275,000) (1,425,000) [Icogs] 35,625 570,000 [Isales] (5,139,025)
Gross profit 2,090,000 950,000 26,600 [Icogs] 3,030,975
Income (loss) from subsidiary 131,100 [C] 131,100 0
Operating expenses (1,900,000) (760,000) [D] 17,100 (2,677,100)
Net Income $321,100 $190,000 353,875
Consolidated NI attrib to NCI [C] 32,775 (32,775)
Consolidated NI attrib to CI $321,100

Statement of Retained Earnings:

BOY retained earnings $1,933,440 $893,000 [E] 893,000 $1,933,440
Net income 321,100 190,000 321,100
Dividends (190,000) (38,000) 38,000 [C] (190,000)
EOY retained earnings $2,064,540 $1,045,000 $2,064,540

Balance Sheet:
Cash $475,000 $380,000 $855,000
Accounts receivable 665,000 570,000 133,000 [Ipay] 1,102,000
Inventory 855,000 760,000 35,625 [Icogs] 1,579,375
Equity investment 1,304,540 [Icogs] 21,280 100,700 [C] 0
942,400 [E]
282,720 [A]
Property, plant and equipment,
net 3,800,000 950,000 4,750,000
Patent [A] 68,400 17,100 [D] 51,300
Goodwill [A] 285,000 285,000
$7,099,540 $2,660,000 $8,622,675

Current liabilities $760,000 $475,000 [Ipay] 133,000 $1,102,000

Long-term liabilities 2,850,000 855,000 3,705,000
Common stock 475,000 95,000 [E] 95,000 475,000
APIC 950,000 190,000 [E] 190,000 950,000
Retained earnings 2,064,540 1,045,000 2,064,540
Noncontrolling interest [Icogs] 5,320 25,175 [C] 326,135
235,600 [E]
70,680 [A]
$7,099,540 $2,660,000 2,477,600 2,477,600 $8,622,675