Essay
On January 1, 2008, Perry Company purchased a 90% interest in Sludge Company for $800,000, the same as the book value on that date.On January 1, 2014, Sludge sold new equipment to Perry for $16,000.The equipment cost $11,000 and had a five year estimated life as of January 1, 2014.
During 2015, Perry sold merchandise to Sludge at 20% above cost in the amount (selling price) of $126,000.At the end of the year, Sludge had $42,000 of this merchandise in its ending inventory.At the beginning of 2015, Sludge had $48,000 of inventory purchased in 2014 from Perry.
Required:
A.Prepare all workpaper entries necessary to eliminate the effects of the intercompany sales on the consolidated financial statements for 2015.
B.Calculate the amount of noncontrolling interest to be deducted from consolidated net income in the consolidated income statement for 2015.Sludge Company reported $40,000 of net income in 2015.
Correct Answer:

Verified
Correct Answer:
Verified
Q3: Petunia Corporation owns 100% of Stone Company's
Q4: In 2014, P Company sells land to
Q5: P Company purchased land from its 80%
Q6: Should the CEO or CFO be a
Q7: P Corporation acquired an 80% interest in
Q9: P Corp.owns 90% of the outstanding common
Q11: P Corporation acquired an 80% interest in
Q13: On January 1, 2013, P Corporation sold
Q16: In the year an 80% owned subsidiary
Q20: Company S sells equipment to its parent