Putt Corporation acquired 70 percent of Slice Company's voting common stock on January 1, 20x3, for $158.900. Slice reported common stock outstanding of $100.000 and retained earnings of $85.000. The fair value of the noncontrolling interest was $68.100 at the date of acquisition. Buildings and equipment held by Slice had a fair value $25,000 higher than book value. The remainder of the differential was assigned to a copyright held by Slice. Buildings and equipment had a 10-year remaining life and the copyright had a 5- year life at the date of acquisition Trial balances for Putt and Slice on December 31, 20x5, are as follows: Cash $ Putt Corporation Debit Credit 15,95 65, eee 30,eee 150,000 8e, ese 315, eee Slice Company Debit Credit $ 58,080 78,888 10.000 188,888 60,089 240,000 15,88 157,630 375, eee 25, eee 24, eee 28,eee 30.ece 110,282 10,888 33,888 17,000 5,889 Accounts Receivable Interest & Other Receivables Inventory Land Buildings & Equipment Bond Discount Investment in Slice Company Cost of Goods Sold Depreciation Experise Interest Expense Other Expense Dividends Declared Accumulated Depreciation-Buildings and Equipment Accounts Payable Other Payables Bonds Payable Common Stock Additional Paid-in Capital Retained Earnings Sales Other Income Gain on Sale of Equipment Income front Slice Company Total $ 120,000 61,000 38,000 250.000 150,000 30,000 165, 240 458,000 28,250 $ 68,888 28,888 20,000 388,888 189,880 188,888 198,480 9,683 $1,295,480 10,999 $1,295,480 $888,888 $888,888 Putt sold land it had purchased for $21.000 to Slice on September 20, 20X4, for $32000. Slice plans to use the land for future plant expansion. On January 1, 20X5. Slice sold equipment to Putt for $91.600. Slice purchased the equipment on January 1, 20X3. for $100,000 and depreciated it on a 10-year basis. Including an estimated residual value of $10,000. The residual value and estimated economic life of the equipment remained unchanged as a result of the transfer, and both companles use stralght-line depreciation. Assume Putt uses the fully adjusted equity method. Required: a compute the amount of income assigned to the noncontrolling interest in the consolidated Income statement for 20x5. Answer is complete and correct. Income to noncontrolling interest $4.710 b. Prepare a reconciliation between the balance in the Investment in Slice Company account reported by Putt at December 31, 20X5. and the underlying book value of net assets reported by Slice at that date. (Enter the proportion of stock held as a fraction (le., 0.75). not in percent.) Answer is complete and correct. Underlying book value of Slice Company stock: Common stock outstanding Retained earnings, January 1, 20X5 Net income for 20X5 Dividends paid in 20X5 Net book value Portion of ownership held by Putt Net book value of ownership held by Putt Unamortized differential Buildings and equipment Copyright Gain on sale of land Deferred gross profit on sale of equipment Realized deferred gain Investment in Slice Company IS 100.000 100.000 30,000 (5.000) S 225.000 0.70 S 157 500 12.250 4.780 (11.000) (6.720) 840 157 630 c. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X5, for Putt and Slice. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. No Event Debit Credit A 1 Accounts Income from Slice Company Common stock Retained earnings NCI in NI of Slice Company Dividends declared Investment in Slice Company NCI in NA of Slice Company 15,120 100,000 100,000 8,480 5,000 151,820 84,980 OOOOOO ooooo C 3 25,000 8,800 Buildings and equipment Copyright Accumulated depreciation Investment in Slice Company NCI in NA of Slice Company 7,500 17,010 7.290 Record the amortized excess value reclassification entry. Consolidation Worksheet Entries A B DE TI > Record the entry to eliminate the gain on the sale of land. Consolidation Worksheet Entries B D E E F Record the entry to eliminate the gain on equipment and to correct the asset's basis. Consolidation Worksheet Entries A B 11 E F Record the entry to adjust Accumulated Depreciation. Note: Enter debits before credits Event Accounts Debit Credit d. Prepare a three-part worksheet for 20X5. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Consolidated 840,400 28.250 9,600 (485,000) (35,000) (57,000) (45,000) 10,990 67,240 0 0 87.240 PUTT CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X5 Consolidation Entries Putt Corp. Slice Co. DR CR Income Statement Sales 450,000 190,400 Other Income 28,250 0 Gain on Sale of Equipment 0 9,800 Less: COGS (375.000) (110,000) Less: Depreciation Expense 25,000) (10,000) Less: Amortization Expense 0 0 Less Interest Expense 24,000) (33,000) Less: Other Expenses 28,000) (17,000) Income from Slice Co. 10.990 0 Consolidated Net Income 37,240 30,000 0 NCI in Net Income 0 0 Controlling Interest in Net Income 37,240 30.000 0 Statement of Retained Earnings Beginning Balance Net Income 37,240 30,000 Less: Dividends Declared (30,000) (5.000) Ending Balance 7.240 25,000 Balance Sheet Cash 15.850 58,000 Accounts Receivable 85.000 70,000 Interest and Other Receivables 30,000 10,000 Inventory 150,000 180,000 Land 80,000 80,000 Buildings & Equipment 315,000 240,000 Less: Accumulated Depreciation (120.000) (80,000) Investment in Slice Co. 157,630 0 Copyright 0 0 Total Assets 693,480 558,000 Accounts Payable 61,000 28.000 Other Payables 30,000 20,000 Bonds Payable 250.000 300,000 Bond Discount 0 (15,000) Common Stock 150,000 100,000 Additional Paid-in Capital 30,000 of Retained Earnings 7,240 25,000 0 NCI in NA of Slice Co. 0 0 Total Liabilities & Equity 528,240 458.000 0 87,240 (35,000) 32,240 0 73,850 135,000 40.000 330,000 140,000 555,000 (180,000) 157,630 0 1.251,480 89,000 50,000 550,000 (15,000) 250,000 30.000 0 954.000