Calculate controlling interest in consolidated net income

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Question - Partner Inc. owns 80% of the shares outstanding of Solo Inc.. Solo sold equipment to Partner on January 1, 2015 for $740,000. The equipment was originally purchased by Solo on January 1, 2014 for $1,280,000 and at that time its estimated depreciable life was eight years. The equipment is estimated to have a remaining useful life of four years on January 1, 2015.  Both companies use the straight-line method to depreciate equipment.  In 2016, Partner reported net income from its independent operations of $3,270,000, and Solo reported net income of $820,000 and declared dividends of $50,000. Partner uses the cost method to record the investment in Solo Inc.

Required:

A. Prepare, in general journal form, the workpaper entries relating to the intercompany sale of equipment that are necessary in the December 31, 2016 consolidated financial statements workpapers.

B. Calculate controlling interest in consolidated net income for 2016.

Reference no: EM131712012

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