On January 1, 2012, Aspen Company acquired 80 percent of Birch Company's outstanding voting stock for $396,000.

7-1 Connect: Module 7 Homework You can also view the attached file for more info. On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $396,000. Birch reported a $420,000 book value and the fair value of the noncontrolling interest was $99,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $188,000 when Cedar had a $181,000 book value and the 20 percent noncontrolling interest was valued at $47,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned to a trade name with a 30-year life. These companies report the following financial information. Investment income figures are not included. 7-1 Connect: Module 7 Homework 2012 2013 2014 Sales: Aspen Company $ 560,000 $ 790,000 $ 847,500 Birch Company 219,750 299,250 582,000 Cedar Company Not available 188,500 290,800 Expenses: Aspen Company $ 525,000 $ 470,000 $ 657,500 Birch Company 162,000 239,000 502,500 Cedar Company Not available 177,000 241,000 Dividends declared: Aspen Company $ 15,000 $ 35,000 $ 45,000 Birch Company 15,000 18,000 18,000 Cedar Company Not available 3,000 8,000 7-1 Connect: Module 7 Homework Assume that each of the following questions is independent: a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2013, balance in Aspen's Investment in Birch Company account? Investment in Birch 7-1 Connect: Module 7 Homework b. What is the consolidated net income for this business combination for 2014? Consolidated net income 7-1 Connect: Module 7 Homework7-1 Connect: Module 7 Homework