c$.$ Prepare the working paper eliminating entries needed in consolidation at December $31,2016.$

$\backslash$table$[[$Consolidation Journal$],[$Ref$.,$Description,Debit,Credit$],[($C$),$Equity in net income of Sunset Coast,$-,1\backslash$times $,0],[,$Investment in Sunset Coast,,$1\backslash$times $,0\backslash$times $],[,$Investment in Sunset Coast,,$1\backslash$times $,0\backslash$times $],[($E$),$Stockholders' equity$-$Sunset Coast, times $,0],[,$Plant assets, net,$\backslash$Delta x$,1\backslash$times $,0\backslash$times $],[($R$),$Plant assets, net,$\backslash$Delta x$,1\backslash$times $,0],[,$Inventory,,$1\backslash$times $,0\backslash$times $],[,$Plant assets, net,,$1\backslash$times $,0$x$],[,$Investment in Sunset Coast,$-,1\backslash$times $,0\backslash$times $],[($O$),$Goodwill,$\backslash$Delta x$,1\backslash$times $,0],[,$Amortization expense,,$1\backslash$times $,0],[,$Depreciation expense,,$1\backslash$times $,0\backslash$times $],[,$Stockholders' equity$-$Sunset Coast, $1/1,\backslash$Delta x$,1\backslash$times $,0\backslash$times $]]$

d$.$ If Puffin reports $$1,200,000$ net income from its own operations in $2016,$ what is consolidated net income for $2016?$

$$Equity Method and Eliminating Entries Three Years After Acquisition

Puffin Industries acquired all of Sunset Coast Digital's stock on January $1,2014,$ for $$7,000,000,$$$4,200,000$ in excess of book value. At that time, Sunset Coast's inventory $($LIFO$)$ was overvalued by $$1,000,000$ and its plant

assets $(10-$year life$)$ were overvalued by $$2,000,000.$ The remaining excess of cost over book value is attributed to undervalued identifiable intangible assets being amortized over $20$ years. Sunset Coast depreciates plant

assets and amortizes intangibles by the straight$-$line method. During $2014$ and $2015,$ Sunset Coast reported total net income of $$1,300,000$ and paid out $50$ percent in dividends. Puffin carries its investment in Sunset Coast

using the complete equity method. Sunset Coast's inventory increased each year since it was acquired by Puffin, and Sunset Coast's reported net income for $2016$ was $$400,000,$ and dividends totaled $50$ percent of reported

income.

a$.$ Compute Puffin's $2016$ equity in net income of Sunset Coast.

$

b$.$ Compute the balance in the Investment in Sunset Coast account at December $31,2016,$ after all equity method entries have been booked.