Polka Company purchased 60% of Samba Company stock for $520,500 on January 1, 2019. On that date, Samba reported common stock of $480,000, retained earnings of $225,000, and the book value and fair value of Samba=s net assets were identical. Goodwill is not impaired during any of the periods covered in this problem.

During 2019, Samba reported net income of $315,000 and paid no dividends. During 2020, Samba reported a net income of $180,000 and paid dividends of $32,000. In addition, the following transactions occurred between Polka and Samba during 2019 and 2020:

(a) Samba Company sold office equipment to Polka Company for $130,000 on July 1, 2019. The office equipment had originally been purchased by samba for $200,000 on January 1, 2015 and was being depreciated over an estimated useful life of ten years using the straight-line method.

(b) Polka Company sold land costing $55,000 to Samba Company for $50,000 on July 1, 2020.

Required: (a) Record the equity method entries on Polka=s books during 2020 related to its investment in Samba

(b) Record the consolidation entries needed to prepare consolidated financial statements on December 31, 2020 Hints: you will need to calculate the fair market value of noncontrolling interest on January 1, 2019 and you may find it helpful to prepare the entries in 2019 in addition to the 2020 entries, but only the 2020 entries will be graded.