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Placid Lake Corporation acquired 8 0 percent of the outstanding voting stock of Scenic, Incorporated, on January 1 , 2 0 2 3 , when
Placid Lake Corporation acquired percent of the outstanding voting stock of Scenic, Incorporated, on January when Scenic had a net book value of $ Any excess fair value was assigned to intangible assets and amortized at a rate of $ per year.
Placid Lake's net income before consideration of its relationship with Scenic and before adjustments for intraentity sales was $ Scenic reported net income of $ Placid Lake declared $ in dividends during this period; Scenic paid $ At the end
of selected figures from the two companies' balance sheets were as follows:
Items Placid Lake Scenic
Inventory $ $
Land
Equipment net
During intraentity sales of $original cost of $ were made. Only percent of this inventory was still held within the consolidated entity at the end of In $ in intraentity sales were made with an original cost of $ Of this merchandise, percent had not been resold to outside parties by the end of the year.
Each of the following questions should be considered as an independent situation for the year
Required:
What is consolidated net income for Placid Lake and its subsidiary?
If the intraentity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?
If the intraentity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?
What is the consolidated balance in the ending Inventory account?
Assume that no intraentity inventory sales occurred between Placid Lake and Scenic. Instead, in Scenic sold land costing $ to Placid Lake for $ On the consolidated balance sheet, what value should be reported for land?
f Assume that no intraentity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January Scenic sold equipment that originally cost $ but had a $ book value on that date to Placid Lake for $ At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December consolidation of these two companies to eliminate the impact of the intraentity transfer?
f Assume that no intraentity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January Scenic sold equipment that originally cost $ but had a $ book value on that date to Placid Lake for $ At the time of sale, the equipment had a remaining useful life of five years. For what is the noncontrolling interests share of Scenics net income?
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