Reference no: EM132990074
Question - Panda Corporation purchased 75% of Saratoga Industries' common stock on January 2, 2019. On January 1, 2020, Saratoga sold equipment to Panda that had a net book value of $40,000 and an original cost of $60,000 for $50,000. On January 1, 2020, Panda sold a building to Saratoga that had a net book value of $500,000 and an original cost of $625,000 for $750,000. The equipment had a remaining useful life of 8 years, and the building had a remaining useful life of 20 years. Neither asset had salvage value. Both companies use straight-line depreciation.
Selected account balances are shown below for Panda and Saratoga for the year ended December 31, 2020:
|
|
Panda
|
Saratoga
|
|
Sales
|
$700,000
|
$690,000
|
|
Cost of Goods Sold
|
450,000
|
250,000
|
|
Other Expenses
|
150,000
|
75,000
|
|
Building - net
|
1,400,000
|
712,500
|
|
Equipment - net
|
790,000
|
467,500
|
|
Gain on sale
|
250,000
|
10,000
|
Required -
1. Calculate the following balances for the year ended December 31, 2020:
a. Consolidated "Other Expenses"
b. Consolidated Buildings
c. Consolidated Equipment
2. Calculate consolidated net income and controlling share of consolidated net income for 2020.
3. Prepare consolidation working paper entry to eliminate Income from subsidiary-parent share. No dividends were declared or paid.