Problem 2 Several years ago Polar Inc. acquired an 80% interest in Icecap Co. The book values of Icecap's asset and liability accounts at that time were considered to be equal to their fair values. Polar's acquisition value corresponded to the underlying book value of Icecap so that no allocations or goodwill resulted from the transfer. The following selected account balances were from the individual financial records of these two companies as of December 31, 2018: Polar Inc Icecap Co. Sales $896,000 $504,000 Cost of goods sold $406,000 $276,000 Operating expenses $210,000 $147,000 Retained earnings, 1/1/18 $1,036,000 $252,000 Inventory $484,000 $154,000 Buildings (net) $501,000 $220,000 Investment income Not Given 118. Assume that Polar sold inventory to Icecap at a markup equal to 25% of cost. Intra-entity transfers were $130,000 in 2017 and $165,000 in 2018. Of this inventory, $39,000 of the 2017 transfers were retained and then sold by Icecap in 2018, while $55,000 of the 2018 transfers was held until 2019. 25% Transfers End Inventory Markup on cost 2017 $130,000 $39,000 2018 $165,000 $55,000 Consolidation Entries DR CR Consolidated Balance NCI Sales Cost of goods sold Polar Inc Icecap Co ($896,000) ($504,000) $406,000 $276,000 $210,000 $147,000 Operating expenses Net Income ($280,000) ($81,000) Retained earnings, 1/1/18 $1,036,000 $252,000 Inventory $484,000 $154,000 Buildings (net) $501,000 $220,000 $0 Investment income Not Given 1. (5 pts) Calculate the Gross Profit %. 2. (10 pts) Determine the gross profit in inventory recognized or deferred in 2017 and 2018. 3. (10 pts) Determine the consolidated financial statement amount for Cost of Goods Sold. 4. (10 pts) Determine the consolidated financial statement amount for Inventory. 5. (10 pts) Determine the consolidated financial statement amount for Net income attributable to the noncontrolling interest