Company P Industries Purchased a 70% Interest in Company S

question 21

Essay

Company P Industries purchased a 70% interest in Company S on January 1, 20X1, and prepared the following determination and distribution of excess schedule:
Since the purchase, there have been the following intercompany transactions:
(1)On January 1, 20X2, Company P sold a piece of equipment with a net book value of $40,000 to Company S for $50,000. The equipment had a five-year remaining life.
(2)Each year, starting in 20X3, Company S has sold merchandise for resale to Company P at a gross profit of 20%. A summary of transactions shows the following:
(3)On January 1, 20X5, Company P purchased Company S's 8%, $100,000 face value bonds for $98,000, which were issued at par value. The bonds have five years to maturity.
Required:
Complete the following schedule to adjust the retained earnings of the noncontrolling and controlling interest on the December 31, 20X5, worksheet for a consolidated balance sheet only. Company P uses the simple equity method to account for its investment.

---

Definitions:

Colon Cancer

A type of cancer that begins in the large intestine (colon), part of the digestive system.

Chronic Pain

Persistent or recurring pain that lasts beyond the usual course of an acute illness or healing of an injury, often without a clear cause.

Selective Serotonin Reuptake Inhibitor

A class of drugs typically used as antidepressants in the treatment of major depressive disorder and anxiety disorders.

Nursing Assistive Personnel

Health care workers who provide basic nursing care under the supervision of registered nurses or licensed practical nurses, including tasks such as bathing, dressing, and feeding patients.