FRED, INC. AND HERMAN CORPORATION Intra-entity inventory transfers: Cost of goods sold Inventory (To defer intra-entity profits in ending inventory. b. Calculations Herman's reported income for 2018 Excess fair value amortization 2017 intra-entity gross profit recognized in 2018 2018 deferred intra-entity gross profit Herman's realized net income for 2018 Noncontrolling interest ownership Net income attributable to noncontrolling interest Noncontrolling interest, 1/1/18 Noncontrolling interest's share of Herman's net income Noncontrolling interest's share of Herman's dividends Noncontrolling interest, 12/31/18 c. Consolidation worksheet adjustments - intra-entity bonds Original gain on retirement Interest income recorded on investment in 2018 Interest expense recorded on liability in 2018 Required increase as of January 1,2019 Bonds payable Premium on bonds payable Interest income Investment in Herman Irvestment in Fred's bonds Interest expense Co remove accounts pertaining to indra-ently bonds "Imestment in Herman" is adjusted here rather than refained earnings pecause eguity method is used and the gain is atributed to the parent) Patents Customer list Investment in Herman Noncontrolling interest (To recognize unamortized balances as of 1/1/18 of amounts allocated within original acquisition price) Equity income of Herman Investment in Herman (To eliminate intra-entity equily income accrual) Investment in Herman Dividends declared (To eliminate intra-entity dividend deciaration) Amortization expense Patents Customer list (To recognize current year amortization expense) Accounts payable Accounts receivable (To remove intra-entity debt created by inventory transfers) "Bonds payable Premium on bonds payable Interest income Investment in parent bonds Interest expense Gain on retirement of bond (To eliminate effect crested by bond ocquiaition and rocognize the related retirement oain) 'sales Cost of poods sold (or purchases) (To eliminate intra-entily trantfors mode durng current year)