On January 1, 2013, Subsid had common stock of $260,000 and retained earnings of $400,000. During that year, Subsid reported sales of $270,000, cost of goods sold of $140,000, and operating expenses of $54,000.

On January 1, 2011, Pair Ent, Inc., acquired 80 percent of Subsid’s outstanding voting stock. At that date, $74,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $34,000 to an undervalued building (with a 10-year life).

In 2012, Subsid sold inventory costing $15,950 to Pair Ent for $29,000. Of this merchandise, Pair Ent continued to hold $8,000 at year-end. During 2013, Subsid transferred inventory costing $17,000 to Pair Ent for $34,000. Pair Ent still held half of these items at year-end.

On January 1, 2012, Pair Ent sold equipment to Subsid for $19,000. This asset originally cost $30,000 but had a January 1, 2012, book value of $11,800. At the time of transfer, the equipment’s remaining life was estimated to be five years.

Pair Ent has properly applied the equity method to the investment in Subsid.

a. Prepare worksheet entries to consolidate these two companies as of December 31, 2013. (1 point each line) Show supporting notes/computations for possible partial credit!

b. Compute the noncontrolling interest in the subsidiary’s net income for 2013. (1 point) Show supporting computations for possible partial credit!

Answer rating: 100% (QA)

Event General Journal Debit Amount Credit Amount Entry G Retained Earnings 1111 Subsid 3600 Cost of Goods Sold 3600 To remove unrealized gross profit ... View the full answer