Several Years Ago Polar Inc Polar Sold a Building to Icecap on January 1, 2012

question 118

Essay

Several years ago Polar Inc. acquired an 80% interest in Icecap Co. The book values of Icecap's asset and liability accounts at that time were considered to be equal to their fair values. Polar's acquisition value corresponded to the underlying book value of Icecap so that no allocations or goodwill resulted from the transaction.
The following selected account balances were from the individual financial records of these two companies as of December 31, 2013: $\begin{array}{lrrr}&\text { Polar } & \text { Icecap } \\&\text { Inc. } & \text { Co. }\\\text { Sales } & \$ 896,000 & \$ 504,000 \\\text { Cost of goods sold } & 406,000 & 276,000 \\\text { Operating expenses } & 210,000 & 147,000 \\\text { Retained earnings, 1/1/13 } & 1,036,000 & 252,000 \\\text { Inventory } & 484,000 & 154,000 \\\text { Buildings (net) } & 501,000 & 220,000 \\\text { Investment income } & \text { not given } &\end{array}$ Polar sold a building to Icecap on January 1, 2012 for $112,000, although the book value of this asset was only $70,000 on that date. The building had a five-year remaining useful life and was to be depreciated using the straight-line method with no salvage value.
Required:
For the consolidated financial statements for 2013, determine the balances that would appear for the following accounts: (1) Buildings (net), (2) Operating expenses, and (3) Non-controlling Interest in Subsidiary's Net Income.

---

Definitions:

Voidable

A term referring to a legal agreement or transaction that is valid but may be annulled by one of the parties involved.

Mutual Mistake

A situation in a contract where all parties have a shared misunderstanding regarding a fundamental fact or factor in the agreement.

Fraudulent Misrepresentation

A false statement made knowingly or recklessly with the intent to deceive, leading another to enter into an agreement or suffer a loss.

Material Fact

A fact that is significant or essential to the matter at hand, and could influence the outcome of a legal decision if known.