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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

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