To address these questions, we'll go through each one step by step:
1. Excess depreciation expense:
To determine the excess depreciation expense, we need to find the undervalued buildings. The total undervaluation is $70,600, and these buildings have a remaining life of 20 years. The annual excess depreciation expense would be $70,600 / 20 = $3,530.
2. Goodwill recognized as of January 1, 2019:
To calculate the goodwill, we need to find the excess of the purchase price over the fair value of net assets acquired. The purchase price is $744,000, and the fair value of net assets is ($530,000 + $70,600) = $600,600. The goodwill would be $744,000 - $600,600 = $143,400.
3. Consolidation worksheet entries as of January 1, 2019:
Entry S (Sheets) would include the 80% acquisition of Taylor:
Debit: Investment in Taylor $744,000
Credit: Cash $744,000
Entry A (Adjustment) would account for the undervalued buildings:
Debit: Buildings $70,600
Credit: Accumulated Depreciation $70,600
4. Investment income on parent company's separate records for 2019:
- Equity method: The parent would recognize its share of Taylor's net income. 80% of $61,900 is $49,520.
- Partial equity method: The parent would recognize its share of Taylor's net income minus dividends received. 80% of ($61,900 - $8,900) is $41,440.
- Initial value method: No investment income is recognized.
5. Investment in Taylor Company account balance on parent company's separate records as of December 31, 2021:
- Equity method: The balance would be the initial investment plus the accumulated equity earnings. $744,000 + 80% of ($61,900 + $80,100 + $89,300) = $1,253,120.
- Partial equity method: The balance would be the initial investment plus the accumulated partial equity earnings. $744,000 + 80% of ($61,900 + $80,100 + $89,300 - $8,900 - $13,400 - $17,900) = $1,172,000.
- Initial value method: The balance would be the initial investment. $744,000.
6. Consolidated balance for the Buildings account as of December 31, 2020:
The consolidated balance for the Buildings account would be the sum of Miller's Buildings and Taylor's Buildings balances, adjusted for the 80% acquisition.
$716,000 (Miller) + 80% of $268,500 (Taylor) = $716,000 + $214,800 = $930,800.
7. Balance of consolidated goodwill as of December 31, 2021:
To calculate the consolidated goodwill, we need to compare the purchase price of Taylor's shares to the fair value of net assets acquired. As of December 31, 2021, the fair value of net assets is ($447,500 + $250,600 + $554,900) - ($265,000 + $79,500 + $376,600) = $1,151,400. The consolidated goodwill would be $744,000 (purchase price) - $1,151,400 (fair value of net assets) = -$407,400.
Please note that negative goodwill indicates a bargain purchase, where the fair value of net assets is higher than the purchase price.
If you have any further questions or need additional clarification, feel free to ask!