Pentamedia acquired 85% of SAS's voting stock on January 1, 2016. The excess of the fair value of SAS over its book value was attributed entirely to goodwill, of which 90% is attributed to Pentamedia and 10% is attributed to the noncontrolling interest in SAS.
It is now December 31, 2020, and consolidation working papers are prepared. Following is information on intercompany transactions:
SAS sold merchandise with a sales value of $25,000 to Pentamedia during 2020. SAS sells its merchandise at a markup of 25% on cost. There is $3,000 sales value of inventory purchased from SAS in Pentamedia's beginning inventory; the sales value of inventory purchased from SAS and remaining in Pentamedia 's ending inventory is $5,000.
Pentamedia sold depreciable property to SAS on January 1, 2018 for $6,000. Pentamedia's cost at that time was $10,000, and accumulated depreciation of $1,500 had been recorded. The property had a remaining life at the date of sale of ten years, straight-line. SAS sold the property to an outside company on January 1, 2020 (two years after SAS acquired it from Pentamedia) for $7,000.
SAS sold land to Pentamedia in 2020 for $1,000; SAS reported a $300 gain on the sale. Pentamedia still holds the land.
SAS reported net income of $7,000 for 2020. Goodwill impairment for 2020 is $2,000.
Required
a. Present the 2020 consolidation eliminating entries related to the intercompany transactions described above, in journal entry form.
b. Calculate Pentamedia 's equity in net income of SAS for 2020, and the noncontrolling interest in consolidated net income for 2020.

Question

Quizplus · Accepted Answer

The Answer of Pentamedia acquired 85% of SAS's voting stock on January 1, 2016. The excess of the fair value of SAS over its book value was attributed entirely to goodwill, of which 90% is attributed to Pentamedia and 10% is attributed to the noncontrolling interest in SAS.
It is now December 31, 2020, and consolidation working papers are prepared. Following is information on intercompany transactions:
SAS sold merchandise with a sales value of $25,000 to Pentamedia during 2020. SAS sells its merchandise at a markup of 25% on cost. There is $3,000 sales value of inventory purchased from SAS in Pentamedia's beginning inventory; the sales value of inventory purchased from SAS and remaining in Pentamedia 's ending inventory is $5,000.
Pentamedia sold depreciable property to SAS on January 1, 2018 for $6,000. Pentamedia's cost at that time was $10,000, and accumulated depreciation of $1,500 had been recorded. The property had a remaining life at the date of sale of ten years, straight-line. SAS sold the property to an outside company on January 1, 2020 (two years after SAS acquired it from Pentamedia) for $7,000.
SAS sold land to Pentamedia in 2020 for $1,000; SAS reported a $300 gain on the sale. Pentamedia still holds the land.
SAS reported net income of $7,000 for 2020. Goodwill impairment for 2020 is $2,000.
Required
a. Present the 2020 consolidation eliminating entries related to the intercompany transactions described above, in journal entry form.
b. Calculate Pentamedia 's equity in net income of SAS for 2020, and the noncontrolling interest in consolidated net income for 2020.

Pentamedia Acquired 85% of SAS's Voting Stock on January 1