On January 1,2017,Pharma Company Purchased a 90% Interest in Sandy

Essay

On January 1,2017,Pharma Company purchased a 90% interest in Sandy Company for $2,800,000.At that time,Sandy had $1,840,000 of common stock and $360,000 of retained earnings.The difference between implied and book value was allocated to the following assets of Sandy Company:
The plant and equipment had a 10-year remaining useful life on January 1,2017.
During 2017,Pharma sold merchandise to Sandy at a 20% markup above cost.At December 31,2017,Sandy still had $180,000 of merchandise in its inventory that it had purchased from Pharma.In 2017,Pharma reported net income from independent operations of $1,600,000,while Sandy reported net income of $600,000.
Required:
A.Prepare the workpaper entry to allocate,amortize,and depreciate the difference between implied and book value for 2017.
B.Calculate controlling interest in consolidated net income for 2017.