*Upstream Depreciable Assets transaction

On January 1, 2021, Penn Company purchased 80% of the outstanding common shares of Senn Company. On January 2, 2021, Senn Company sold equipment with an original cost of $2,000 and a carrying value of $1,200 to Penn Co for $1,500. Senn Co. had owned the equipment for two years and used a five-year straight-line depreciation with no residual value. Penn Co. is using straight-line depreciation over three years with no residual value. Senn Co. reported net income of $3,000 and Penn reported separate operating income (excluding income from Senn Co.) of $5,000 during 2021.

01. . Prepare eliminating (consolidation) entries for intercompany transactions on December 31, 2021. (1) Elimination of excess depreciartion because of the sales of equipment Account Debit Accumulated Depreciation Credit Debit Credit Account Gain on sale a2. Prepare Penn Co's fully adjusted equity method journal entries to eliminate intercompany transaction (1) Share Deferral of gain on sale of equipment Account Debit Credit (2) Share Reversal of the deferred gain (Depreciation difference) Account Debit Credit What is the consolidated net income? Q3 Answer: 04. What is the net income attributable to NCI (NCI in NI)? Answer: 04. Answer: What is the Net Income attributable to Controlling Interest (Controlling Interest Net Income)? 05. Based on the information above, please complete the following worksheet. Consolidation Entries DR CR Penn Co. Senn Co. Consolidated 24,000 (12,000) (3,000) (4,000) Income Statement Sales Less: COGS Less: Depreciation Expense Less: Other expenses Gain on sale of fixed assets Income from Senn Co. Consolidated Net Income NCI in Net Income Controlling Interest in Net Income 14,700 (7,000) (2,000) (3,000) 300 5,000 3,000 0 0 0 0 5,000 3,000 0 0 0 Balance sheet Equipment Accumulated Depreciation 12,000 (4,000) 8,000 (3,000)