On January 1, 2016, Parent Company Acquired 90% of the Common

On January 1, 2016, Parent Company acquired 90% of the common stock of Subsidiary Company for $360,000.On this date, Subsidiary had total owners' equity of $270,000, including retained earnings of $100,000.
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On January 1, 2016, any excess of cost over book value is attributable to the undervaluation of land, building, and goodwill.Land is worth $20,000 more than cost.Building is worth $60,000 more than book value.It has a remaining useful life of 6 years and is depreciated using the straight-line method.
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During 2016, Parent has accounted for its investment in Subsidiary using the cost method.
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During 2016, Subsidiary sold merchandise to Parent for $70,000, of which $20,000 is held by Parent on December 31, 2016.Subsidiary's usual gross profit on affiliated sales is 50%.
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On December 31, 2016, Parent still owes Subsidiary $5,000 for merchandise acquired in December.
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On July 1, 2016, Parent sold to Subsidiary some equipment with a cost of $40,000 and a book value of $18,000.The sales price was $30,000.Subsidiary is depreciating the equipment over a 4-year life, assuming no salvage value and using the straight-line method.
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Required:
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Prepare a determination and distribution of excess schedule.Next, complete the Figure 7-11 worksheet for a consolidated balance sheet as of December 31, 2016.
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