PROBLEM 5-3 Work paper Entries and Consolidated Net Income, Complete Equity Method LOS LO 6 LO 3 Perke Corporation purchased 80% of the stock of Superstition Company for $1.970,000 on January 1, 2020. On this date, the fair value of the assets and liabilities of Superstition Company was equal to their book value except for the inventory and equipment accounts. The inventory had a fair value of $725,000 and a book value of $600,000. Sixty percent of Superstition Com- pany's inventory was sold in 2020, the remainder was sold in 2021. The equipment had a book value of $900,000 and a fair value of $1,075,000. The remaining useful life of the equipment is seven years. The balances in Superstition Company's capital stock and retained earnings accounts on the date of acquisition were $1,200,000 and $600,000, respectively. Perke uses the complete equity method to account for its investment in Superstition. The following financial data are from Superstition Company's records, 2020 2021 $750,000 $900,000 Net income 150,000 225,000 Dividends declared Chapter 5 Allocation and Depreciation of Differences Between Implied and Book Values A. In general journal form, prepare the entries on Perke Company's books to account forts B. Prepare the eliminating entries necessary for the consolidated statements work papers in C. Assuming Perke Corporation's net income for 2020 was $1,000,000, calculate the controlling Proc Required: investment in Superstition Company for 2020 and 2021. 2020 and 2021. interest in consolidated net income for 2021. - Candwill Impairment) and Worksheets for Varlous PROBLEM 5-3 Work paper Entries and Consolidated Net Income, Complete Equity Method LOS LO 6 LO 3 Perke Corporation purchased 80% of the stock of Superstition Company for $1.970,000 on January 1, 2020. On this date, the fair value of the assets and liabilities of Superstition Company was equal to their book value except for the inventory and equipment accounts. The inventory had a fair value of $725,000 and a book value of $600,000. Sixty percent of Superstition Com- pany's inventory was sold in 2020, the remainder was sold in 2021. The equipment had a book value of $900,000 and a fair value of $1,075,000. The remaining useful life of the equipment is seven years. The balances in Superstition Company's capital stock and retained earnings accounts on the date of acquisition were $1,200,000 and $600,000, respectively. Perke uses the complete equity method to account for its investment in Superstition. The following financial data are from Superstition Company's records, 2020 2021 $750,000 $900,000 Net income 150,000 225,000 Dividends declared Chapter 5 Allocation and Depreciation of Differences Between Implied and Book Values A. In general journal form, prepare the entries on Perke Company's books to account forts B. Prepare the eliminating entries necessary for the consolidated statements work papers in C. Assuming Perke Corporation's net income for 2020 was $1,000,000, calculate the controlling Proc Required: investment in Superstition Company for 2020 and 2021. 2020 and 2021. interest in consolidated net income for 2021. - Candwill Impairment) and Worksheets for Varlous