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Need help with D, E, and F Pearl Company acquired 80 % of Star Corporation on 1/2018. Fair values of Star's assets and liabilities approximated
Need help with D, E, and F
Pearl Company acquired 80 % of Star Corporation on 1/2018. Fair values of Star's assets and liabilities approximated book values on that date. Pearl uses the initial value method to account for its investment in Star. On 1/2019, Pearl bought equipment from Star for $60,000 that had originally cost Star $120,000 and had $ 110,000 of Accumulated depreciation at the time. The equipment had a five-year remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2020 fiscal year. a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2020? (this is the amount you will need for the *TA entry at 1/2020.) c. Which company's Retained earnings account will be adjusted in the *TA entry in part a? (Which company was the "initiator of the transaction?) d. How much excess depreciation will there be in each of the first five years after the transfer? e. Pearl's 2020 net income, without including any investment income, was 440,000 and Star reported net income of $ 135,000 in 2020. What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) What A 460 Strolling intorantia a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2020? (this is the amount you will need for the *TA entry at 1/20 c. Which company's Retained earnings account will be adjusted in the *TA er in part a? (Which company was the "initiator" of the transaction?) d. How much excess depreciation will there be in each of the first five years after the transfer? e. Pearl's 2020 net income, without including any investment income, was $ 440,000 and Star reported net income of $ 135,000 in 2020. What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f. What will the noncontrolling interest's share of the subsidiary's net income be 2020? (Consider whether the equipment sale had been upstream or downstreamStep by Step Solution
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