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

question 5

Essay

Pale Company owns 90% of the outstanding common stock of Shale Company. On January 1, 2017, 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, 2017. In 2017, 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, 2017 and 2018 consolidated statements workpapers. Pale Company uses the cost method to record its investment in Shale Company.
B. Calculate equity in subsidiary income for 2017 and noncontrolling interest in net income for 2017

---

Definitions:

Dark-Skinned Patient

Refers to a patient having a higher melanin content in their skin, which impacts certain medical assessments and treatments.

Buccal Mucosa

The lining of the inside of the cheeks and the back of the lips, inside the mouth where they touch the teeth.

Foam Swabs

Soft, sterile applicators made from foam used for medical cleaning procedures or sample collection.

Unconscious Patient

An individual who is not awake and is incapable of responding to stimuli due to various causes, such as trauma, illness, or medical procedures.