Panama Company acquired 60% of Samoa Corporation on 1/13. Fair values of Samoa's assets and liabilities approximated book values on that date. Panama uses the initial value method to account for its investment in Samoa. On 1/14, Panama bought equipment from Samoa for $60,000 that had originally cost Samoa $120,000 and had $ 100,000 of Accumulated depreciation at the time. The equipment had a five-year remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2015 fiscal year.

a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2015? (this is the amount you will need for the *TA entry at 1/15.) c. Which company's Retained earnings account will be adjusted in the *TA entry in part a? (Which company was the initiator of the transaction?) d How much excess depreciation will there be in each of the first five years after the transfer? e Panama's 2015 net income, without including any investment income, was $ 400,000 and Samoa reported net income of $ 125,000 in 2015. What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f What will the noncontrolling interest's share of the subsidiary's net income before 2015? (Consider whether the equipment sale had been upstream or downstream.)