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On January 1, 2018, Sledge had common stock of $310,000 and retained earnings of $450,000.

On January 1, 2018, Sledge had common stock of $310,000 and retained earnings of $450,000. During that year, Sledge reported sales of $320,000, cost of goods sold of $165,000, and operating expenses of $59,000.

On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $79,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $39,000 to an undervalued building (with a 10-year remaining life).

In 2017, Sledge sold inventory costing $18,700 to Percy for $34,000. Of this merchandise, Percy continued to hold $8,000 at year-end. During 2018, Sledge transferred inventory costing $17,550 to Percy for $39,000. Percy still held half of these items at year-end.

On January 1, 2017, Percy sold equipment to Sledge for $21,500. This asset originally cost $35,000 but had a January 1, 2017, book value of $12,800. At the time of transfer, the equipment's remaining life was estimated to be five years.

Percy has properly applied the equity method to the investment in Sledge.


1----Prepare worksheet entries to consolidate these two companies as of December 31, 2018.

----Prepare Entry *G to remove the intra-entity gross profit from the beginning account balances.

----Prepare Entry *TA to adjust the equipment balance to the original cost and to adjust the accumulated depreciation to the consolidated January 1, 2018 balance.

----Prepare Entry S to eliminate the subsidiary's stockholders' equity accounts and to recognize the noncontrolling interest balance as of January 1, 2018.

----Prepare Entry A to recognize acquisition-date fair value allocations adjusted for 2 years of amortization.

-----Prepare Entry I to remove the parent's equity method income.

-----Prepare Entry E to recognize 2018 excess amortization.

-----Prepare Entry TI to eliminate the intra-entity inventory tranfers during 2018.

-----Prepare Entry G to remove the intra-entity gross profit from the ending account balances.

-----Prepare Entry ED to eliminate the excess depreciation on equipment recorded at transfer price.


2---Compute the net income attributable to the noncontrolling interest for 2018.

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