Question
On January 1, 2015, Sledge had common stock of $230,000 and retained earnings of $370,000. During that year, Sledge reported sales of $240,000, cost of
On January 1, 2015, Sledge had common stock of $230,000 and retained earnings of $370,000. During that year, Sledge reported sales of $240,000, cost of goods sold of $125,000, and operating expenses of $51,000. |
On January 1, 2013, Percy, Inc., acquired 80 percent of Sledges outstanding voting stock. At that date, $71,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $31,000 to an undervalued building (with a 10-year life). |
In 2014, Sledge sold inventory costing $18,200 to Percy for $26,000. Of this merchandise, Percy continued to hold $5,000 at year-end. During 2015, Sledge transferred inventory costing $13,950 to Percy for $31,000. Percy still held half of these items at year-end. |
On January 1, 2014, Percy sold equipment to Sledge for $17,500. This asset originally cost $27,000 but had a January 1, 2014, book value of $11,200. At the time of transfer, the equipments remaining life was estimated to be five years. |
Percy has properly applied the equity method to the investment in Sledge. |
a. | Prepare worksheet entries to consolidate these two companies as of December 31, 2015 |
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