Topp Corporation acquired 70 percent of Morris Company's voting common stock on January 1, 20X3, for $158,900. Morris reported common stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling interest was $68,100 at the date of acquisition. Buildings and equipment held by Morris had a fair value $25,000 higher than book value. The remainder of the differential was assigned to a copyright held by Morris. Buildings and equipment had a 10-year remaining life and the copyright had a 5-year life at the date of acquisition.

Trial balances for Topp and Morris on December 31, 20X5, are as follows:

Topp sold land it had purchased for $21,000 to Morris on September 20, 20X4, for $32,000. Morris plans to use the land for future plant expansion. On January 1, 20X5, Morris sold equipment to Topp for $91,600. Morris purchased the equipment on January 1, 20X3, for $100,000 and depreciated it on a 10-year basis, including an estimated residual value of $10,000. The residual value and estimated economic life of the equipment remained unchanged as a result of the transfer and both companies use straight-line depreciation. Assume Topp uses the fully adjusted equity method.

Required
a. Compute the amount of income assigned to the noncontrolling interest in the consolidated income statement for 20X5.
b. Prepare a reconciliation between the balance in the Investment in Morris Company Stock account reported by Topp at December 31, 20X5, and the underlying book value of net assets reported by Morris at that date.
c. Give all elimination entries needed to prepare a full set of consolidated financial statements at December 31, 20X5, for Topp and Morris.
d. Prepare a three-part worksheet for 20X5 in goodform.

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Topp Corporation Morris Company Credit Credit 8 1 Interest & Other Receivables ompany Stock Topp Corporation Credit Depreciation Buildings & Equipment 8 Additional Paid-in Capital Gain on Sale of Equipment Income from Subsidiary $1,295,480 $1,295480 $808,000 $808,000