Panda Corporation purchased 75% of Saratoga Industries' common stock on January 2, 2019. On January 1, 2020, Saratoga sold equipment to Panda that had a net book value of $40,000 and an original cost of $60,000 for $50,000. On January 1, 2020, Panda sold a building to Saratoga that had a net book value of $500,000 and an original cost of $625,000 for $750,000. The equipment had a remaining useful life of 8 years, and the building had a remaining useful life of 20 years. Neither asset had salvage value. Both companies use straight-line depreciation.
Selected account balances are shown below for Panda and Saratoga for the year ended December 31, 2020:
Panda Saratoga
Sales $700,000 $690,000
Cost of Goods Sold 450,000 250,000
Other Expenses 150,000 75,000
Building - net 1,400,000 712,500
Equipment - net 790,000 467,500
Gain on sale 250,000 10,000
Required
:
- Calculate the following balances for the year ended December 31, 2020:
- Consolidated "Other Expenses"
- Consolidated Buildings
- Consolidated Equipment
- Calculate consolidated net income and controlling share of consolidated net income for 2020.
3. Prepare consolidation working paper entry to eliminate Income from subsidiary-parent share. No dividends were declared or paid.