Question
Puffin Industries acquired 90 percent of Sunset Coast Digitals stock on January 1, 2014. for 3,150,000. At that time. Sunset Coasts stockholders equity totaled 1,400,000
Puffin Industries acquired 90 percent of Sunset Coast Digitals stock on January 1, 2014. for 3,150,000. At that time. Sunset Coasts stockholders equity totaled 1,400,000 and the estimated fair value of the noncontrolling interest was $350,000.Sunsets Coasts inventory (FIFO) was overvalued by 500,000 and its plant assets (10- year life) were overvalued by 1,000,000.The remaining excess of fair value over book value is attributed to undervalued identifiable intangible assets being amoritized over 20 years. Sunset Coast depreciates plant assets and amoritizes intangibles by the straight-line method. During the next three years Sunset Coast reported total net income of $850,000 and paid out 50 percent in dividends. Puffin carries its investment in Sunset Coast using the complete equity method. Sunset Coasts reported net income for 2016 was $200,000
- Compute Puffins 2016 equity in Net Income of Sunset Coast and the noncontrolling interest in net income of Sunset Coast for 2016.
- Compute the balance in the investment in Sunset Coast account at December 31, 2016 after all equity method entries have been booked
- Compute the balance of Noncontrolling interest, reported on the December 31, 2016 , consolidated balance sheet
- Prepare the working paper eliminating entries needed to consolidate the trial balance s of the Sunset Coast at December 31, 2016
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