Entries and Computation of Income and Retained Earnings
Platt Company acquired an 80% interest in Sloane Company when the retained earnings of Sloane Company were $300,000. On January 1, 2011, Sloane Company recorded a $250,000 gain on the sale to Platt Company of equipment with a remaining life of five years. On January 1, 2012, Platt Company recorded a $180,000 gain on the sale to Sloane Company of equipment with a remaining life of six years. Sloane Company reported net income of $180,000 and declared dividends of 60,000 in 2012. It reported retained earnings of $520,000 on January 1, 2012, and $640,000 on December 31, 2012. Platt Company reported net income from independent operations of $400,000 in 2012 and retained earnings of $1,800,000 on December 31, 2012.
Required:
- Prepare in general journal form the entries necessary in the December 31, 2012, consolidated statements workpaper to eliminate the effects of the intercompany sales.
- Calculate controlling interest in consolidated net income for the year ended December 31, 2012.
- Calculate consolidated retained earnings on December 31, 2012.
- Calculate noncontrolling interest in consolidated income for the year ended December 31, 2012.