Package Corporation acquired 90 percent ownership of Sack Grain Company on January 1, 20x4, for $121,500 when the fair value of Sack's net assets was $20,000 higher than its $115,000 book value. The increase in value was attributed to amortizable assets with a remaining life of 10 years. At that date, the fair value of the noncontrolling interest was equal to $13,500. During 20x4, Sack sold land to Package at a $7000 profit. Sack Grain reported net income of $25,000 and paid dividends of $4,600 in 20x4. Package reported income, exclusive of its income from Sack Grain, of $36,000 and paid dividends of $15,500 in 20x4. Required: a. Compute the amount of income assigned to the controlling interest in the consolidated income statement for 20x4, Controlling interest b. By what amount will the 20x4 income assigned to the controlling interest increase or decrease if the sale of land had been from Package to Sack Grain, the gain on the sale of land had been included in Package's $36,000 income, and the $25,000 from operations of Sack Grain? was income by Reported income will In its 20X7 consolidated income statement, Plate Development Company reported consolidated net income of $970,000 and $45.000 of income assigned to the 30 percent noncontrolling interest in its only subsidiary, Subsidence Mining Inc. During the year, Subsidence had sold a previously mined parcel of land to Plate for a new housing development; the sales price to Plate was $490,000, and the land had a carrying amount at the time of sale of $580,000. At the beginning of the previous year, Plate had sold excavation and grading equipment to Subsidence for $255,000; the equipment had a remaining life of 6 years as of the date of sale and a book value of $210,000. The equipment originally had cost $350,000 when Plate purchased it on January 2, 20x2. The equipment never was expected to have any salvage value. Plate had acquired 70 percent of the voting shares of Subsidence eight years earlier when the fair value of its net assets was $240,000 higher than book value, and the fair value of the noncontrolling interest was $72,000 more than a proportionate share of the book value of Subsidence's net assets. All the excess over the book value was attributable to intangible assets with a remaining life of 10 years from the date of combination. Both parent and subsidiary use straight-line amortization and depreciation. Assume Plate uses the fully adjusted equity method. Required: a. Present the journal entry made by Plate to record the sale of equipment in 20x6 to Subsidence. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Check my v Required: a. Present the journal entry made by Plate to record the sale of equipment in 20x6 to Subsidence. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet A Record the entry for the sale of equipment in 20x6. b. Present all consolidation entries related to the intercompany transfers of land and equipment that should appear in the consolidation worksheet used to prepare a complete set of consolidated financial statements for 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list X Import a new list A Record the entry to eliminate the loss on the purchase of land. Record the entry to eliminate the gain on equipment and to correct the asset's basis. C Record the entry to adjust Accumulated Depreciation. c. Compute Subsidence's 20X7 reported net income. ook Net incame int ences d. Compute Plate's 20X7 income from its own separate operations, excluding any investment income from its investment in Subsidence Mining. Income from separate operations
