Help 6 On January 1, 2018, Sledge had common stock of $120,000 and retained earn

Question

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

Explanation / Answer

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

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