Problem 3: Pierson Company acquired 80% of Simmons Corp. on 1 /16. Fair values of Simmons's assets and liabilities approximated book values on that date. Pierson uses the initial value method to account for its investment in Simmons Corp. On 1/17, Pierson bought equipment from Simmons for s200,000 that had originally cost Simmons $400.000 and had $320.000 of Accumulated depreciation at the time of the intra-entity sale. The equipment had a four-year remaining life and was being depreciated using the straight-line method. You are preparing the consolidation worksheet for the 2018 fiscal year a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2018? (This is the amount you will need for the TA entry at 118.) c. Which company's Retained earnings account wit be adjusted with the TA entry in part b? Which company was the inifiator) of the transaction?) d. How muc transfer? d How much excess deprecetion wil here be in each of the frst years after the 000 e. Pierson's 2018 net income, without including any investment income, was $390 be reported before removing the noncontroling interests share of the subsidiarys ne income? (This includes the effect of the ED entry-) at will the noncontrolling interests share of the subsidiarys net income be for 2018? (Consider whether the equipment sale had been upstream or downstream.) Problem 3: Pierson Company acquired 80% of Simmons Corp. on 1 /16. Fair values of Simmons's assets and liabilities approximated book values on that date. Pierson uses the initial value method to account for its investment in Simmons Corp. On 1/17, Pierson bought equipment from Simmons for s200,000 that had originally cost Simmons $400.000 and had $320.000 of Accumulated depreciation at the time of the intra-entity sale. The equipment had a four-year remaining life and was being depreciated using the straight-line method. You are preparing the consolidation worksheet for the 2018 fiscal year a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2018? (This is the amount you will need for the TA entry at 118.) c. Which company's Retained earnings account wit be adjusted with the TA entry in part b? Which company was the inifiator) of the transaction?) d. How muc transfer? d How much excess deprecetion wil here be in each of the frst years after the 000 e. Pierson's 2018 net income, without including any investment income, was $390 be reported before removing the noncontroling interests share of the subsidiarys ne income? (This includes the effect of the ED entry-) at will the noncontrolling interests share of the subsidiarys net income be for 2018? (Consider whether the equipment sale had been upstream or downstream.)
