Plan corporation acquired 80% of the outstanding voting stock of Sal Corporation on January 1, 2017 for $14,000,000, when Sals stockholders equity consisted of $8,000,000 capital stock and $1,000,000 Retained Earnings. The price reflected a $300,000 undervalued inventory, which was sold in 2017, and a $3,000,000 undervalued building with a 5 year life, from January 1, 2017.

Additional Information:

1) Plan sells inventory items to Sal on a regular basis. During 2019 Plan sold $800,000 of inventory (revenue) to Sal. The original cost of the inventory to Plan had been $500,000. The deferred Gross profit on this inventory was $75,000. During 2020, Plan sold inventory to Sal for $500,000 (revenue). The original cost of the inventory had been $200,000. The deferred Gross Profit on the inventory is $50,000. These are all downstream transactions.

2) During 2018 Plan sold land (this is downstream) that cost $1,000,000 to Sal for $1,400,000.

3) Plan sold equipment with a net book value of $600,000 to Sal on January 1, 2020 for $500,000. (This is downstream). The equipment has a 3-year remaining life.

Plan uses a full equity method of accounting. The consolidation working papers for December 21, 2020 are on the attached answer sheet. Please provide:

1) The calculations for the intercompany transfers

2) The FMV calculation

3) The Income from Sub Calculation

4) The Investment Account Reconciliation

5) The Consolidation Journal Entries in General Journal Format

6) Finish the consolidationfor December 31, 2020

Plan Sal Ref OR Credit Consol Financial Statements at 12/31/20 (In Thousands) Income Statement Sales Loss on sale of Equipment Income from Sun Cost of Sales 25000 11100 -100 2011.667 -14000 4500 Depreciation Expense 4000 -1500 3000 -2000 Other Expenses Non-Controlling int. Income Net Income 6011.667 3000) Statement of Retained Earnings Retained Earnings 1/1/20 Net Income -Dividends 20000 6011.667 -4000 5000 30001 -1001 Retained Earnings 12/31/20 22011.67 7900 Balance Sheet Cash Accounts Receivable-net Inventories Land Buildings-net Equipment -net Investment in Sun 1500 2700 4000 5000 16000 12000 16976.67 1300 2500 2500 2000 3000 5000 Goodwill Total Assets 58176.67 16300 Total Assets Accounts Payable Other Liabilities Capital Stock Retained Earings Non Controlling Interest..1/1/20 5670 3496 27000 22011.67 900 1500 6000 7900 Non Controlling Interest 12/31/20 Total Liab. And Equity 58176.67 16300 Plan Sal Ref OR Credit Consol Financial Statements at 12/31/20 (In Thousands) Income Statement Sales Loss on sale of Equipment Income from Sun Cost of Sales 25000 11100 -100 2011.667 -14000 4500 Depreciation Expense 4000 -1500 3000 -2000 Other Expenses Non-Controlling int. Income Net Income 6011.667 3000) Statement of Retained Earnings Retained Earnings 1/1/20 Net Income -Dividends 20000 6011.667 -4000 5000 30001 -1001 Retained Earnings 12/31/20 22011.67 7900 Balance Sheet Cash Accounts Receivable-net Inventories Land Buildings-net Equipment -net Investment in Sun 1500 2700 4000 5000 16000 12000 16976.67 1300 2500 2500 2000 3000 5000 Goodwill Total Assets 58176.67 16300 Total Assets Accounts Payable Other Liabilities Capital Stock Retained Earings Non Controlling Interest..1/1/20 5670 3496 27000 22011.67 900 1500 6000 7900 Non Controlling Interest 12/31/20 Total Liab. And Equity 58176.67 16300