Pale Company Owns 90% of the Outstanding Common Stock of Shale

question 23

Essay

Pale Company owns 90% of the outstanding common stock of Shale Company.On January 1, 2014, Shale Company sold equipment to Pale Company for $300,000.Shale Company had purchased the equipment for $450,000 on January 1, 2006 and has been depreciating it over a 10 year life by the straight-line method.The management of Pale Company estimated that the equipment had a remaining life of 5 years on January 1, 2014.In 2014, Pale Company reported $225,000 and Shale Company reported $150,000 in net income from their independent operations.
Required:
A.Prepare in general journal form the workpaper entries relating to the intercompany sale of equipment that are necessary in the December 31, 2014 and 2015 consolidated statements workpapers.Pale Company uses the cost method to record its investment in Shale Company.
B.Calculate equity in subsidiary income for 2014 and noncontrolling interest in net income for 2014.

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Definitions:

Cross-Cultural Investigation

Research that examines the similarities and differences across various cultures to understand how cultural context influences behaviors, values, and attitudes.

Individualism

A cultural orientation that emphasizes the importance of self-reliance, personal freedom, and individual achievement, often over communal or societal goals.

Collectivism

A cultural value or social outlook that emphasizes the importance of groups and the collective, over individual action or identity.

Prosocial Behavior

Prosocial behavior refers to voluntary actions intended to help or benefit another individual or group of individuals, such as sharing, comforting, or rescuing.