Photo Industries has owned 80 percent of Shutter Corporation for many years. On January 1, 20X6, Photo paid Shutter $249,000 to acquire equipment that Shutter had purchased on January 1, 20X3, for $276,000. The equipment is expected to have no scrap value and is depreciated over a 15-year useful life. Photo reported operating earnings of $100,000 for 20X8 and paid dividends of $40,000. Shutter reported net income of $41,000 and paid dividends of $24,000 in 20X8.

Required: a. Compute the amount reported as consolidated net income for 20X8.

Photo Industries has owned 80 percent of Shutter Corporation for many years. On January 1, 20X6, Photo paid Shutter $249.000 to acquire equipment that Shutter had purchased on January 1, 20X3. for $276.000. The equipment is expected to have no scrap value and is depreciated over a 15-year useful life. Photo reported operating earnings of $100.000 for 20x8 and paid dividends of $40.000 Shutter reported net Income of $41.000 and pald dividends of $24.000 in 2078. (Leave no cell blank, enter"0" wherever required.) Required: a compute the amount reported as consolidated net Income for 20x8. Answer is complete but not entirely correct. Consolidated net income $ 117.500 b. By what amount would consolidated net Income change of the equipment sale had been a downstream sale rather than an upstream sale? Answer is complete and correct. Net income change 5 c. Prepare the consolidation entry or entries required to eliminate the effects of the Intercompany sale of equipment in preparing a full set of consolidated financial statements at December 31, 20X8. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.) Answer is complete and correct. No Event Credit A A 1 Accounts Investment in Shutter Equipment NCI in NA of Shutter Accumulated depreciation OOOO Debit 18.800 27.000 4.700 50,500 B 2 2.350 Accumulated depreciation Depreciation expense OO 2,350