Answered step by step
Verified Expert Solution
Question
1 Approved Answer
(1). Calculate 2017 equity in net income of Sawyer, reported on Perpetual's separate books, and the 2017 noncontrolling interest in net income of Sawyer, reported
(1). Calculate 2017 equity in net income of Sawyer, reported on Perpetual's separate books, and the 2017 noncontrolling interest in net income of Sawyer, reported on Perpetual's consolidated financial statements. Show your computations.
(2) prepare the working paper entries made in consolidation on December 31 ,2017 related to the intercompany transaction
. . Problem 3 (28 Points) On January 2, 2014, Perpetual Industries acquired 70% of Sawyer Corporation's voting stock. Total goodwill of $1,000,000 was recognized at the date of acquisition, allocated $750,000 to the controlling interest and $250,000 to the noncontrolling interest. Sawyer's reported assets and liabilities had book values that approximated fair value at the date of acquisition, but it had previously unreported customer lists (5 year life, SL) valued at $500,000. It is now December 31, 2017, four years after the date of acquisition. Additional information is as follows: For 2017, Sawyer reported income of $600,000. Sawyer paid $80,000 dividend in 2017. Goodwill impairment for the years 2014-2016 totals $100,000, and goodwill impairment for 2017 is $200,000. Sawyer sells merchandise to Perpetual at a markup of 20% over cost. Perpetual's beginning inventory for 2017 includes $300,000 in merchandise purchased from Sawyer. Perpetual's ending inventory for 2017 includes $600,000 in merchandise purchased from Sawyer. Total sales from Sawyer to Perpetual were $2,500,000. Perpetual sells merchandise to Sawyer at a markup of 25% over sales. Sawyer's beginning inventory for 2017 includes $1,000,000 in merchandise purchased from Perpetual. Sawyer's ending inventory for 2017 includes $800,000 in merchandise purchased from Perpetual. Total sales from Perpetual to Sawyer were $5,000,000. a. (1). Calculate 2017 equity in net income of Sawyer, reported on Perpetual's separate books, and the 2017 noncontrolling interest in net income of Sawyer, reported on Perpetual's consolidated financial statements. Use the schedule below for your answer. (14 Points) . Total Equity in net income 420,000 Noncontrolling interest in net income 1, Sawyer's reported net income 600,000Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started