January 1, 2019 SOS company invested 2,400,000 $ for75% of RAT company, in that date the fair value of RAT is equal to its book value except inventories was undervalued 20,000, equipment (10years) undervalued 80,000 ,6% 5 years bonds undervalued 60,000. The owner’s equity was $1,300,000 shares, 900,000 premiums and 600,000 as retained earnings, the following are selective information about the parent and its subsidiary:

During 2019

1- The subsidiary reported net income for 2019 was$152,000 and declared and paid $50000 dividend.

During 2020

2- 1/1/ 2020 the parent sold a land cost 200,000 for $220,000. The reported income for the subsidiary was 90,000 and 10,000 dividends

3- 1/1/ 2020 the subsidiary sold an equipment for parent for 120,000 and net book value 110,000, five years remaining use life.

4- 1/11/2020 the parent sold goods for 250,000 including 25% markup, the subsidiary ending inventory include 60000$ inventory from parent.

5- The subsidiary sold goods at 150,000 which cost$120,000 ,30% of these goods remained in inventory

6- Subsidiary net income of the year 2020 was $180,000 and$30,000 dividend.

7- During 2020 the subsidiary sold goods with mark up 20% at cost 300,000, 25% of this inventory still in hand in 31/12/2020.

8- the subsidiary sold the land that purchased from parent for 250,000.

9- The subsidiary reported net income for 2020 was 80,000 and 20,000 dividends were paid.

10- The parent retained earnings in 31/12/2018 1,800,000 $. Dividends and income without income from subsidiary during the years was: 2019 (income 500,000$ dividend 150,000), 2020 (income 300,000$, dividend 80,000).

Required:

1. Prepare all the elimination entries in 31/12/2020
2. Journalize the income and dividend under equity methods in parent’s book for the year 2020.
3. Complete the following table:

   Accounts	2019	2020
   Income from subsidiary
   Controlling interest share
   Consolidated income
   Consolidated retained earning
   Non-controlling share
   Non-controlling of interest
   Investment/
   Unamortized amount
   Amortizations

Answer rating: 100% (QA)

a Elimination entries at 31122020 Dr Subsidiary Inventory 60000 Dr Subsidiary Equipment 80000 Dr Sub... View the full answer