Spartan Corp, owned 80% of the voting common stock of Olympic Co. In reviewing the accounts, you
Question:
Spartan Corp, owned 80% of the voting common stock of Olympic Co. In reviewing the accounts, you identified the following intra-company transactions took place.
(1) In 2021, Olympic sold a parcel of land to Spartan. The land had a book value of $82,000 and was sold to Spartan for $145,000.
(2) In 2020 Spartan sold merchandise costing $ 1 50,000 to Olympic for $200,000. 40% of the merchandise were not used or sold to outsiders as of December 31, 2020.
(3) On January 1, 2021, Olympic sold equipment to Spartan for $168,000 in cash. The equipment originally cost $140,000 but had a book value of only $98,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method and assuming zero salvage value. Olympic's reported net income for 2021 was $119,000.
Required:
(1) Assuming that the equity method has been applied by Spartan for this acquisition, record the necessary consolidation entries in relation to the above intra-company transactions as of December 31, 2021? Note: any extraneous entries (i.e., entries that do not belong to Dec. 31,2021) will cost you points.
(2) What was the non-controlling interest's share of Olympic Co.'s net income? Show the necessary supporting computation. You get ZERO CREDIT for writing an answer without the necessary supporting computations.
(3) What is the ending NCI to be reported on the consolidated balance sheet?
Expert Answer:
Quiz 1 Equity Method Consolidation Entries 1121 Spartan Corp owns 80 of the voting common stock of O... View the full answer
