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d. How much excess depreciation will there be in each of the first five years after the transfer? e. Pass's 2022 net income, without including any investment income, was $360,000 and Stay reported net income of $ 115,000 in 2022. What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f. What will the noncontrolling interest's share of the subsidiary's net income be for 2022? (Consider whether the equipment sale had been upstream or downstream.)

d. How much excess depreciation will there be in each of the first five years after the transfer? e. Pass's 2022 net income, without including any investment income, was $360,000 and Stay reported net income of $ 115,000 in 2022. What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f. What will the noncontrolling interest's share of the subsidiary's net income be for 2022? (Consider whether the equipment sale had been upstream or downstream.)

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...
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Question D,E,F,

Problem 3 Pass Company acquired 90 % of Stay Corporation on 1/2020. Fair values of Stay's assets and liabilities approximated book values on that date. Pass uses the initial value method to account for its investment in Stay. On 1/2021, Pass bought equipment from Stay for $60,000 that had originally cost Stay $120,000 and had $ 90,000 of Accumulated depreciation at the time. The equipment had a five-year remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2022 fiscal year. a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2022? (this is the amount you will need for the *TA entry at 1/2022.) c. Which company's Retained earnings account will be adjusted in the *TA entry in part a? (Which company was the "initiator" of the transaction?) d. How much excess depreciation will there be in each of the first five years after the transfer? e. Pass's 2022 net income, without including any investment income, was $360,000 and Stay reported net income of $ 115,000 in 2022 What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f. What will the noncontrolling interest's share of the subsidiary's net income be for 2022? (Consider whether the equipment sale had been upstream or downstream.)
Transcribed Image Text:Problem 3 Pass Company acquired 90 % of Stay Corporation on 1/2020. Fair values of Stay's assets and liabilities approximated book values on that date. Pass uses the initial value method to account for its investment in Stay. On 1/2021, Pass bought equipment from Stay for $60,000 that had originally cost Stay $120,000 and had $ 90,000 of Accumulated depreciation at the time. The equipment had a five-year remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2022 fiscal year. a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2022? (this is the amount you will need for the *TA entry at 1/2022.) c. Which company's Retained earnings account will be adjusted in the *TA entry in part a? (Which company was the "initiator" of the transaction?) d. How much excess depreciation will there be in each of the first five years after the transfer? e. Pass's 2022 net income, without including any investment income, was $360,000 and Stay reported net income of $ 115,000 in 2022 What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f. What will the noncontrolling interest's share of the subsidiary's net income be for 2022? (Consider whether the equipment sale had been upstream or downstream.)
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