Question
On January 1, 2018, Sledge had common stock of $290,000 and retained earnings of $430,000. During that year, Sledge reported sales of $300,000, cost of
On January 1, 2018, Sledge had common stock of $290,000 and retained earnings of $430,000. During that year, Sledge reported sales of $300,000, cost of goods sold of $155,000, and operating expenses of $57,000.
On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $77,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $37,000 to an undervalued building (with a 10-year remaining life).
In 2017, Sledge sold inventory costing $20,800 to Percy for $32,000. Of this merchandise, Percy continued to hold $6,000 at year-end. During 2018, Sledge transferred inventory costing $20,350 to Percy for $37,000. Percy still held half of these items at year-end.
On January 1, 2017, Percy sold equipment to Sledge for $20,500. This asset originally cost $33,000 but had a January 1, 2017, book value of $12,400. 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.
- Compute the net income attributable to the noncontrolling interest for 2018.
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