Poplar Outdoor Corporation owns 60 percent of the voting stock of Sugg Australia. Date-of-acquisition information is as follows:

• Acquisition cost: $59.25 million
• Fair value of the noncontrolling interest: $30.75 million
• Sugg's book value: $15 million
• Value of unreported acquired indefinite lived trademarks: $22.5 million.

As of the beginning of the current year, trademarks are impaired by $3 million, and goodwill impairment is $7.5 million. There is no current year impairment for the trademarks, but current year goodwill impairment is $1.5 million. Sugg reports net income of $2.25 million for the current year, and declares no dividends. Its total equity at the beginning of the year is $28.5 million.

Following is information on intercompany transactions between Poplar and Sugg:

• Sugg sold land to Poplar in the current year at a loss of $750,000. Poplar still owns the land.
• Intercompany profit in Poplar's beginning inventory, purchased from Sugg, is $300,000.
• Intercompany profit in Poplar's ending inventory, purchased from Sugg, is $435,000.
• Total sales from Sugg to Poplar, at the price charged to Poplar, were $9 million.
• Poplar sold administrative facilities with a book value of $12 million to Sugg two years ago, at the beginning of the year, for $10.5 million. The facilities had a remaining life of 10 years, straight-line. Sugg still uses the facilities.

Required

a. Prepare a schedule to compute equity in net income and noncontrolling interest in net income for the current year, assuming Poplar uses the complete equity method.

Instructions:

1. Enter answers in thousands. For example, $900,000 is $900 in thousands and $15 million is $15,000 in thousands.
2. Use negative signs with answers that reduce the net income amounts.
3. HINT: Goodwill share to controlling interest is 70% (NCI's share is 30%).

	Equity in NI	Noncontrolling Interest in NI
Sugg reported net income	$ Answer	$ Answer
Goodwill impairment loss	Answer	Answer
Intercompany transactions:
Upstream land loss	Answer	Answer
Upstream confirmed profit on beg. inventory	Answer	Answer
Upstream unconfirmed profit on end. inventory	Answer	Answer
Downstream confirmed loss on facilities sale	Answer	Answer
Total	$ Answer	$ Answer

b. Compute the investment balance on Poplar's books at the end of the current year.

Instructions:

1. Enter answers in thousands. For example, $900,000 is $900 in thousands and $15 million is $15,000 in thousands.
2. Use negative signs with answers that reduce the investment balance.
3. HINT: Goodwill share to controlling interest is 70% (NCI's share is 30%).

Investment original cost	$ Answer
Change in Sugg's book value to beginning of current year	Answer
Trademark impairment to beginning of current year	Answer
Goodwill impairment to beginning of current year	Answer
Upstream unconfirmed profit on beginning inventory	Answer
Unconfirmed loss on downstream facilities sale	Answer
Investment balance, beginning of current year	Answer
Equity in net income for current year	Answer
Investment balance, end of current year	$ Answer