14) Papal Corporation acquired an 80% interest in Sandman Corporation at a cost equal to 80% of the book value of Sandman's net assets in 2010. At the time of the acquisition, the book values and fair values of Sandman's assets and liabilities were equal. During 2011, Papal recorded sales of $440,000 of merchandise to Sandman at a gross profit rate of 30%. Sandman's beginning and ending inventories for 2011 were $60,000 and $80,000, respectively. Income statement information for both companies for 2011 is as follows:
Invest.income from Sandman 59,600
Cost of Goods Sold(1,060,000)(394,000)
Prepare a consolidated income statement for Papal Corporation and Subsidiary for 2011.
15) Plover Corporation acquired 80% of Sink Inc. equity on January 1, 2010, when the book values of Sink's assets and liabilities were equal to their fair values. The cost of the investment was equal to 80% of the book value of Sink's net assets.
Plover separate income (excluding Sink) was $1,800,000, $1,700,000 and $1,900,000 in 2010, 2011 and 2012 respectively. Plover sold inventory to Sink during 2010 at a gross profit of $48,000 and one quarter remained at Sink at the end of the year. The remaining 25 percent was sold in 2011. At the end of 2011, Plover has $25,000 of inventory received from Sink from a sale of $100,000 which cost Sink $80,000. There are no unrealized profits in the inventory of Plover or Sink at the end of 2012. Plover uses the equity method in its separate books. Select financial information for Sink follows:
Cost of Sales(420,000)(440,000)(500,000)
Net Income$ 70,000$ 80,000$ 90,000
Prepare a schedule to determine the controlling interest share of the consolidated net income