Reference no: EM132489266

On January 1, Year 5, PET Company acquired 900 ordinary shares of SET Company for $63,000. On this date, the shareholders' equity accounts of SET Company were as follows:

Ordinary shares (1,000 no par value shares issued)                 $20,000

Preferred shares (4,000 no par value shares issued) (Note 1)     40,000

Retained earnings                                                               30,000

                                                                                      $90,000

Note 1: The preferred shares are $1, cumulative, non-participating with a liquidation value of 1.05. They were two years in arrears on January 1, Year 5.

The following are the statements of retained earnings for the two companies for Year 5:

                                                               PET                          SET

Retained earnings, beginning of year          $50,000                $30,000

Profit                                                   30,000                22,000

Dividends                                             (25,000)             (15,000)

Retained earnings, end of year                $55,000              $37,000

Additional information:

1. PET uses the cost method to account for its investment in SET.
2. Any acquisition differential is allocated to patents with an estimated useful life of six years as at January 1, Year 5. Neither company has any patents recorded on their separate-entity records.

Required:

Question 1) Calculate the Goodwill and Non-Controlling Interest at acquisition.

Question 2) Prepare the amortization schedule of the acquisition differential, and calculate the consolidated net income and NCI for Year 5.