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Thumbs up for quick answers: Prime Company holds 8 0 percent of Suspect Company s stock, acquired on January 1 , 2 0 X 2

Thumbs up for quick answers: Prime Company holds 80 percent of Suspect Companys stock, acquired on January 1,20X2, for $182,000. On the acquisition date, the fair value of the noncontrolling interest was $45,500. Suspect reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Prime uses the fully adjusted equity method in accounting for its investment in Suspect.
Trial balance data for the two companies on December 31,20X6, are as follows:
Item Prime Company Suspect Company
Debit Credit Debit Credit
Cash and Accounts Receivable $ 127,000 $ 32,000
Inventory 276,00091,000
Land 85,00090,000
Buildings and Equipment 490,000120,000
Investment in Suspect Company 215,470
Cost of Goods Sold 127,60078,200
Depreciation and Amortization Expense 24,50012,000
Other Expenses 19,0006,000
Dividends Declared 30,0005,000
Accumulated Depreciation $ 200,900 $ 36,000
Accounts Payable 53,00021,000
Bonds Payable 160,00035,000
Common Stock 300,000100,000
Retained Earnings 416,46072,200
Sales 220,000170,000
Gain on Sale of Equipment 15,500
Income from Suspect Company 28,710
Total $ 1,394,570 $ 1,394,570 $ 434,200 $ 434,200
Additional Information
At the date of combination, the book values and fair values of all separately identifiable assets and liabilities of Suspect were the same. At December 31,20X6, the management of Prime reviewed the amount attributed to goodwill as a result of its purchase of Suspect stock and concluded an impairment loss of $20,475 should be recognized in 20X6 and shared proportionately between the controlling and noncontrolling shareholders.
On January 1,20X5, Suspect sold land that had cost $9,000 to Prime for $20,250.
On January 1,20X6, Prime sold to Suspect equipment that it had purchased for $82,500 on January 1,20X1. The equipment has a total economic life of 15 years and was sold to Suspect for $70,500. Both companies use straight-line depreciation.
There was $5,500 of intercompany receivables and payables on December 31,20X6.

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