Problem 5-33 (LO 5-2, 5-3, 5-4, 5-5, 5-7) On January 1, 2016, Monica Company acquired 70 percent of Young Company's outstanding common stock for $798,000. The fair value of the noncontrolling interest at the acquisition date was $342,000. Young reported stockholders' equity accounts on that date as follows: Common stock-$10 par value Additional paid-in capital Retained earnings $200,000 100,000 660,000 In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $60,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years. During the subsequent years, Young sold Monica inventory at a 20 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following: Inventory Remaining at Year-End (at transfer Transfer Price $ 60,000 80,000 90,000 price) $35,000 37,000 43,000 Year 2016 2017 2018 In addition, Monica sold Young several pieces of fully depreciated equipment on January 1, 2017, for $61,000. The equipment had originally cost Monica $100,000. Young plans to depreciate these assets over a five-year period. In 2018, Young earns a net income of $230,000 and declares and pays $80,000 in cash dividends. These figures increase the subsidiary's Retained Earnings to a $990,000 balance at the end of 2018. During this same year, Monica reported dividend income of $56,000 and an investment account containing the initial value balance of $798,000. No changes in Young's common stock accounts have occurred since Monica's acquisition. a. Prepare the 2018 consolidation worksheet entries for Monica and Young. b. Compute the net income attributable to the noncontrolIling interest for 2018 Complete this question by entering your answers in the tabs below. Required A Required B view transaction list transaction list No Transaction Accounts Debit Credit Retained earnings, 1/1/18 (Young) 1 Cost of goods sold Retained earnings, 1/1/18 (Monica) 2 2 Equipment Accumulated depreciation Investment in Young 3 Retained earnings, 1/1/18 (Monica) Common stock - Young Additional paid-in capital - Young Retained earnings, 1/1/18 (Young) Investment in Young Noncontrolling interest in Young Franchise agreement Buildings Investment 5 5 in Young Noncontrolling interest in Young Dividend income 6 6 Dividends declared Depreciation expense Amortization expense 7 7 Franchise agreement Buildings Sales Cost of goods sold Cost of goods sold Inventory Accumulated depreciation 10 10 Depreciation expense Required A Required B LO a. Prepare the 2018 consolidation worksheet entries for Monica and Young. b. Compute the net income attributable to the noncontrolling interest for 2018. Complete this question by entering your answers in the tabs below. Required B Required A Compute the net income attributable to the noncontrolling interest for 2018. Net income attributable to noncontrolling interest Required A Required B
