P7-35 Intercompany Sale of Land and Depreciable Asset LO 7-3, 7-6 Putt Corporation acquired 70 percent of Slice Company's voting common stock on January 1, 20X3, for $158,900. Slice reported common stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling interest was $68,100 at the date of acquisition. Buildings and equipment held by Slice had a fair value $25,000 higher than book value. The remainder of the differential was assigned to a copyright held by Slice. Buildings and equipment had a 10-year remaining life and the copyright had a 5-year life at the date of acquisition. Trial balances for Putt and Slice on December 31, 20X5, are as follows: Putt Corporation Slice Company Debit Credit Cash $ 15,850 Debit $ 58,000 Credit Accounts Receivable 65,000 70,000 Interest & Other Receivables 30,000 10,000 Inventory 150,000 180,000 Land 80,000 60,000 Buildings & Equipment 315,000 240,000 Bond Discount 15,000 Investment in Slice Company 157,630 Cost of Goods Sold 375,000 110,000 Depreciation Expense 25,000 10,000 Interest Expense 24,000 33,000 Other Expense 28,000 17,000 Dividends Declared, 30,000 5,000 Accumulated Depreciation-Buildings and $ 120,000. $ 60,000 Equipment Accounts Payable 61,000 28,000 Other Payables 30,000 20,000 Bonds Payable Common Stock Additional Paid-in Capital Retained Earnings Sales Other Income Gain on Sale of Equipment Income from 51ice Company Total 250,000 300,000 150,000 100,000 30,000 165,240 100,000 450,000 190,400 28,250 9,600 10,990 $1,295,480 $1,295,480 $800,000 $808,000 2000 Slice on September 20 20X4 for $32.000. Slice plans to use Gain on Sale OT Income from Slice Company Total $1,295,480 10,990 $1,295,480 $808,000 $808,000 Putt sold land it had purchased for $21,000 to Slice on September 20, 20X4, for $32,000, Slice plans to use the land for future plant expansion. On January 1, 20X5, Slice sold equipment to Putt for $91,600. Slice purchased the equipment on January 1, 20X3, for $100,000 and depreciated it on a 10-year basis, including an estimated residual value of $10,000. The residual value and estimated economic life of the equipment remained unchanged as a result of the transfer, and both companies use straight-line depreciation. Assume Putt uses the fully adjusted equity method d. Prepare a three-part worksheet for 20X5. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) ces Income Statement Sales Other Income Gain on Sale of Equipment Less: COGS Less Depreciation Expense Less Amortization Expense Less Interest Expense Less Other Expenses Income from Slice Co Consolidated Net Income NCI in Net Income PUTT CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet Controlling Interest in Net Income Statement of Retained Earnings Beginning Balance Net income Less Dividends Declared Ending Balance Balance Sheet December 31, 20X5 Putt Corp. Slice Co. Consolidation Entries 8O DR CR Consolidated 0 0 0 0 0 0 Ending Balance Balance Sheet Cash Accounts Receivable Interest and Other Receivables (Inventory Land Buildings & Equipment Less Accumulated Depreciation Investment in Slice Co Copyright Total Assets Accounts Payable Other Payables Bonds Payable Bond Discount Common Stock Additional PaidAn Capital Retained Earnings NCI in NA of Slice Co Total Liabilities & Equity