Help 6 On January 1 2018 Sledge had common stock of 120000 a

Help 6 On January 1, 2018, Sledge had common stock of $120,000 and retained earnings of $260,000. During that year sales of $130,000, cost of goods sold of $70,000, and operating expenses of $40,000. On January 1, 2016. Percy, Inc. acquired 80 percent of Sledge\'s outstanding voting stock. At that date, $60,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $20,000 to an undervalued building (with a 10-year remaining life). points In 2017, Sledge sold inventory costing $9.000 to Percy for $15,000. Of this merchandise, Percy continued to hold $5,000 at year-end. During 2018, Sledge transferred inventory costing $11,000 to Percy for $20,000. Percy still held half of these items at year-end On January 1, 2017, Percy sold equipment to Sledge for $12,000. This asset originally cost $16.000 but had a January 1, 2017, book value of $9,000. At the time of transfer, the equipment\'s remaining life was estimated to be five years. Print Percy has properly applied the equity method to the investment in Sledge Referencesa. Prepare worksheet entries to consolidate these two companies as of December 31, 2018. b. Compute the net income attributable to the noncontrolling interest for 2018 Complete this question by entering your answers in the tabs below Required A Required B Compute the net income attributable to the noncontrolling interest for 2018 income attributable to Required A K Prev6 of 6 Next

Solution

Part A)

The worksheet entries to consolidate the two companies are provided as below:

____

Notes:

The calculations for Entry I (Equity in Income of Sledge) is given below:

_____

Part b)

The net income attributable to noncontrolling interest is arrived as follows:

	Account Titles	Debit	Credit
Entry*G	Retained Earnings, 1/1/2018 (Sledge)	$2,000
	Cost of Goods Sold		$2,000
Entry*TA	Equipment	$4,000
	Investment in Sledge	$2,400
	Accumulated Depreciation		$6,400
Entry S	Common Stock (Sledge)	$120,000
	Retained Earnings, 1/1/2018 (Adjusted) (Sledge) [260,000 - 2,000]	$258,000
	Investment in Sledge (80%) [(120,000 + 258,000)*80%]		$302,400
	Noncontrolling Interest in Sledge, 1/1/2018 (20%) [(120,000 + 258,000)*20%]	$75,600
Entry A	Contracts (60,000 - 3,000*2)	$54,000
	Buildings (20,000 - 2000*2)	$16,000
	Investment in Sledge (80%) [(54,000 + 16,000)*80%)]		$56,000
	Noncontrolling Interest in Sledge, 1/1/2018 (20%) [(54,000 + 16,000)*20%]	$14,000
Entry I	Equity in Income of Sledge	$10,600
	Investment in Sledge		$10,600
Entry E	Depreciation expense	$2,000
	Amortization expense	$3,000
	Contracts (60,000/20)		$3,000
	Buildings (20,000/10)		$2,000
Entry TI	Sales	$20,000
	Cost of Goods Sold		$20,000
Entry G	Cost of Goods Sold (10,000*9,000/20,000)	$4,500
	Inventory		$4,500
Entry ED	Accumulated Depreciation (12,000/5 - 9,000/5)	$600
	Depreciation expense		$600