Question
On January 1, 2018, Sledge had common stock of $270,000 and retained earnings of $410,000. During that year, Sledge reported sales of $280,000, cost of
On January 1, 2018, Sledge had common stock of $270,000 and retained earnings of $410,000. During that year, Sledge reported sales of $280,000, cost of goods sold of $145,000, and operating expenses of $55,000.
On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $75,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $35,000 to an undervalued building (with a 10-year remaining life).
In 2017, Sledge sold inventory costing $15,000 to Percy for $30,000. Of this merchandise, Percy continued to hold $9,000 at year-end. During 2018, Sledge transferred inventory costing $15,750 to Percy for $35,000. Percy still held half of these items at year-end.
On January 1, 2017, Percy sold equipment to Sledge for $19,500. This asset originally cost $31,000 but had a January 1, 2017, book value of $12,000. At the time of transfer, the equipment's remaining life was estimated to be five years.
Percy has properly applied the equity method to the investment in Sledge.
- Prepare worksheet entries to consolidate these two companies as of December 31, 2018. -- Journal Entries: *G, *TA, S, A, I, E, G, ED
- Compute the net income attributable to the noncontrolling interest for 2018.
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